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The American Prospect - articles by authorenTrump Is Right About NAFTA, But That Doesn’t Make Him Pro-Workerhttp://prospect.org/article/trump-right-about-nafta-doesn%E2%80%99t-make-him-pro-worker
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<p>Crates of U.S. manufactured parts are prepared for shipment into Mexico at Freight Dispatch Service Agency LTD in Pharr, Texas.</p>
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<p><em>This article <a href="https://www.huffingtonpost.com/entry/opinion-kuttner-nafta-trade_us_5b01f809e4b0463cdba39de3">originally appeared</a> at </em>The Huffington Post.<em> <a href="http://www.prospect.org/subscribe">Subscribe here</a>. </em></p>
<p><span class="dropcap">A</span>s a deadline for <a data-rapid-parsed="slk" data-rapid_p="1" data-v9y="1" data-ylk="subsec:paragraph;cpos:1;elm:context_link;itc:0" href="https://www.huffingtonpost.com/topic/nafta">NAFTA</a> negotiations set by House Speaker Paul Ryan came and went on May 17, Treasury Secretary Steve Mnuchin <a data-rapid-parsed="slk" data-rapid_p="2" data-v9y="1" data-ylk="subsec:paragraph;cpos:1;elm:context_link;itc:0" href="https://www.politico.com/story/2018/05/20/mnuchin-nafta-trade-trump-598805">now says</a> that the negotiations are still alive and might even extend into next year.</p>
<p>Of course, President <a data-rapid-parsed="slk" data-rapid_p="3" data-v9y="1" data-ylk="subsec:paragraph;cpos:2;elm:context_link;itc:0" href="https://www.huffingtonpost.com/topic/donald-trump">Donald Trump</a> has undercut his senior aides before, and there is no telling what he might impulsively do if the mood strikes him. Previously, Trump had insisted that he <a data-rapid-parsed="slk" data-rapid_p="4" data-v9y="1" data-ylk="subsec:paragraph;cpos:2;elm:context_link;itc:0" href="https://www.politico.com/story/2018/04/20/lighthizer-nafta-trump-trade-congress-539248">would withdraw</a> the U.S. from the North American Free Trade Agreement if negotiations were not concluded and approved by this session of Congress.</p>
<p>By delaying NAFTA talks until after the November election, however, the GOP could avoid an awkward situation in which most of the NAFTA revisions demanded by Trump’s negotiators are supported by labor and the Democrats and opposed by big business-friendly Republicans. It is another case of Trump trying to steal the liberals’ clothes with a working-class base that once reliably supported Democrats but now is more inclined to back Trump.</p>
<p>One key demand sought by Trump’s negotiators would kill the NAFTA provision that allows corporations to challenge ordinary domestic regulations in special tribunals as improper restraints of trade. Another would add more accurate rules of origin so that inputs substantially made in China are not credited as produced in North America.</p>
<p>A third would increase labor rights in Mexico. It would even require that a large share of NAFTA production be made by workers earning <a data-rapid-parsed="slk" data-rapid_p="9" data-v9y="1" data-ylk="subsec:paragraph;cpos:5;elm:context_link;itc:0" href="https://www.wsj.com/articles/u-s-pushes-nafta-partners-to-accept-a-wage-floor-in-auto-sector-1525685401">at least $16 an hour</a>, to reduce job flight to Mexico.</p>
<p>This provision, among others, <a data-rapid-parsed="slk" data-rapid_p="11" data-v9y="1" data-ylk="subsec:paragraph;cpos:6;elm:context_link;itc:0" href="https://www.reuters.com/article/us-trade-nafta/nafta-deal-might-be-ready-by-end-may-could-go-past-july-1-election-mexico-idUSKCN1II2BU">proved too much</a> for Mexico to swallow, with that country facing its own presidential election on July 1, but it is emblematic of how the Trump administration has shifted the conversation on trade. </p>
<p>It’s unlikely that Trump studied NAFTA in any detail. The architect of this proposed deal is his chief trade negotiator, Robert Lighthizer. But Trump, for all his weirdness, has a keen nose for winning political symbolism.</p>
<p>Trump’s earlier threat to withdraw from NAFTA gave his negotiators the leverage to win surprising tentative concessions from Canada and Mexico. If no deal is reached, a NAFTA pullout may yet be a different sort of win for Trump with his nationalist base.</p>
<p>Otherwise, Trump’s brand of nationalism is mostly economically irrational and politically demagogic. His other trade policies are all over the map. </p>
<p>He has wildly oscillated between getting tough with China and proposing <a data-rapid-parsed="slk" data-rapid_p="12" data-v9y="1" data-ylk="subsec:paragraph;cpos:10;elm:context_link;itc:0" href="https://www.nytimes.com/2018/05/17/opinion/trump-china-bribe-national-security.html">sweetheart deals</a> that serve his own business interests.</p>
<p>His tariff orders on steel and aluminum are scattershot rather than targeted at nations that illegally subsidize their own exports. He has needlessly started <a data-rapid-parsed="slk" data-rapid_p="13" data-v9y="1" data-ylk="subsec:paragraph;cpos:11;elm:context_link;itc:0" href="https://www.huffingtonpost.com/entry/opinion-kuttner-iran-deal-europe_us_5af9ac11e4b09a94524aac7e">a trade war with Europe</a> as fallout from his withdrawal from the Iran nuclear deal. </p>
<p>But in this case, the proposed changes to NAFTA are good policy. It’s nonsensical for a North American free trade area to allow tariff-free inputs from China, which is not a party to the agreement. It is equally wrong to allow extralegal tribunals for corporations to do end-runs around national regulation. It is also reasonable to put limits on jobs fleeing to a low-wage nation, Mexico, in which workers have no effective labor rights.</p>
<p>The existing elements of NAFTA are not “free trade.” They amount to a special-interest deal by and for multinational corporations, which undermines the ability of the U.S. to broker a balanced form of decent capitalism.</p>
<p>Yet the political center—Democratic presidents Barack Obama and Bill Clinton, as well as Republicans George H.W. Bush, George W. Bush, and Ronald Reagan—promoted global trade deals that plainly served corporations at the expense of workers. That embrace gave a huge opening to Trump.</p>
<p>Other elements of Trump’s pro-worker stance are largely phony. His <a data-rapid-parsed="slk" data-rapid_p="14" data-v9y="1" data-ylk="subsec:paragraph;cpos:15;elm:context_link;itc:0" href="https://www.huffingtonpost.com/entry/opinion-kuttner-republicans-tax-cut_us_5add0678e4b089e33c8945fc">tax reform</a> serves mainly corporations. His regulatory changes reduce protections for workers and consumers. His proposal to charge foreign health systems more for drugs would <a data-rapid-parsed="slk" data-rapid_p="15" data-v9y="1" data-ylk="subsec:paragraph;cpos:15;elm:context_link;itc:0" href="https://www.huffingtonpost.com/entry/trump-pharma-drug-prices_us_5af5920de4b032b10bf9eaa7">boost pharmaceutical profits</a> and not reduce prices for American consumers.</p>
<p>But in a climate of resentment against weakened job opportunity, compounded by a mashup of identity conflicts, a little economic nationalism goes a long way. That Trump is able to exploit these grievances is substantially the fault of the political center for embracing a Davos version of globalism that not only undermines living standards for millions of Americans, but looks down on them as losers. If NAFTA becomes a winner for Trump, the corporate globalists have themselves to blame.</p>
<p>With the exception of NAFTA, the brand of economic nationalism espoused by onetime Trump adviser Steve Bannon―and by Trump’s own rhetoric―has more to do with demonizing foreigners than truly benefiting American workers. Yet there is a positive, progressive version of economic nationalism waiting in the wings. It would revise trade deals that sell out American workers, repeal Trump’s tax cut and put the money instead in large-scale infrastructure and green-transition investments.</p>
<p>That could produce millions of good jobs and new made-in-America technologies and industries, as well as renewed credibility for an activist government. It would be salutary to have a real debate, one that progressives could win, about what could truly Make America Great Again.</p>
</div></div></div>Tue, 22 May 2018 09:00:00 +0000230237 at http://prospect.orgRobert KuttnerTrump’s Gratuitous Damage to Global Harmonyhttp://prospect.org/article/trump%E2%80%99s-gratuitous-damage-global-harmony
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<p>President Donald Trump speaks at the North Side Gymnasium in Elkhart, Indiana </p>
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<p><span class="dropcap">T</span>hat Nobel is likely to continue eluding President Trump. Consider his latest trade war with Europe.</p>
<p>Are you concerned that Trump will win the Nobel Prize for making peace with North Korea’s Kim Jong-Un? You needn’t worry.</p>
<p>Kim and Trump may stage the illusion of progress towards a de-nuclearized Korea. But the details of that goal will take long and arduous diplomacy. </p>
<p>One risk is that Kim is setting a trap for Trump in which both leaders can claim success, but as negotiations drag on North Korea keeps working on its arsenal and its nuclear delivery vehicles. Trump, showman and cynic, may go along so that he can claim a diplomatic breakthrough.</p>
<p>The opposite risk is that Trump will realize that he is being played, and will one-up Kim by walking out of the talks, thus adding to regional tensions. The one thing that will not happen is the immediate conclusion of a final and verifiable deal.</p>
<p>But a bogus deal with North Korea is only one of several arenas in which Trump is setting back world peace. Even more serious is the fallout from Trump’s disavowal of the 2015 nuclear accord with Iran.</p>
<p>President Trump’s scrapping of that deal could set off new tensions in the region, including a strengthening of Iranian hardliners and an unleashing of a bellicose Israel. But that may not be the most serious fallout. Trump’s Iran policy is at risk of fracturing what’s left of the American alliance with Europe.</p>
<p>The Trump administration insists that any nation that does business with Iran will be in violation of the U.S. commercial boycott and will face stringent sanctions. That targets the EU, which supports the deal and did not want Trump to kill it.</p>
<p>After sanctions were lifted in 2015, Europe dramatically increased its trade and investment with Iran. Airbus has already begun delivering jetliners to Iran Air, a 100-plane deal worth billions. The French oil and gas company Total has a $5 billion deal to extract Iranian natural gas. Volkswagen exports cars to Iran, and Peugeot Citroen manufactures them there.</p>
<p>Under the U.S. sanctions regime, any European company that does business in or with Iran will be barred from doing business in the U.S. The U.S. Treasury has given European companies three to six months to end their dealings in or with Iran.</p>
<p>But this threat, recently echoed by Trump’s new ambassador to Germany, Richard Grennell, in a tweet (!) warning Europe’s companies to start winding down their operations in Iran, has produced something that has eluded the fragmented members of the EU for decades—absolute unity. </p>
<p>Europe is just emerging from a decade-long recession and its recovery is fragile. The success of the Macron presidency in Paris and the shaky Merkel coalition government in Berlin depend on the recovery not being derailed.</p>
<p><span class="pullquote-right">Europe can ill afford to be barred from the American market, and this latest assault on Europe’s sovereignty is one affront too many. </span>By last Friday, Europe’s leaders were resolute in their determination to nullify Trump’s threat of sanctions.</p>
<p>Bruno Le Maire, the French finance minister, told a television interviewer, “We have to work among ourselves in Europe to defend our European economic sovereignty.” He added, “Do we want to be a vassal that obeys and jumps to attention?” Similar comments were heard in other European capitals.</p>
<p>Between the final round of negotiations to revise or withdraw from NAFTA, to tit-for-tat trade threats against China, and the imposition of tariffs on aluminum and steel, there has been a lot of loose talk about trade wars. But general sanctions against major EU-based companies really would be a trade war.</p>
<p>It’s one thing to take a hard line against Iran, Mexico, China, or Korea. It’s something else to get gravely at odds with America’s most reliable ally. </p>
<p>Someone will have to back down here, and for once Europe may find some spine. If not, this is a trade war for real, and it will be Trump’s achievement, as the collateral damage of a dumb and totally gratuitous foreign policy detour in the Middle East. </p>
<p>The Nobel Peace Prize, let’s recall, is given by the Norwegians, among the most open-minded, idealist, and diplomatically proficient of European nations. (The other Nobels are given by the Swedes.) It was the Norwegian Nobel committee that awarded President Barack Obama the Nobel Peace Prize not long after he took office, in part because he wasn’t George W. Bush and in part because of the hope he represented. Donald Trump makes Bush look like Pope Francis. </p>
<p>Maybe they should bestow a Nobel Anti-Peace Prize for doing the most needless damage to world peace. Trump would be a shoo-in for the booby prize.</p>
<p><em>An <a href="https://www.huffingtonpost.com/entry/opinion-kuttner-iran-deal-europe_us_5af9ac11e4b09a94524aac7e">earlier version</a> of this article appeared at </em>HuffPost. <em><a href="http://www.prospect.org/subscribe">Subscribe here</a>.</em></p>
</div></div></div>Tue, 15 May 2018 09:00:00 +0000230183 at http://prospect.orgRobert KuttnerBirthday Greetings to Karl Marx http://prospect.org/article/birthday-greetings-karl-marx
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<p>The Karl Marx Statue in Trier is revealed in a ceremony</p>
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<p><span class="dropcap">T</span>his past weekend marked the 200th anniversary of Karl Marx, who was born in the German city of Trier on May 5, 1818. With more and more workers pushed aside by the latest brand of capitalism and more and more of the gains going to the top, it’s a good time to inquire if perhaps Marx might have been right after all.</p>
<p>When I was first studying such things, Marx looked to me like an idiot. He was convinced that capitalism would collapse from its own contradictions, and then would give way to a workers’ paradise.</p>
<p>But in postwar America and in much of the West, the proletariat was making steady gains. Far from turning revolutionary, workers were joining unions and supporting mainstream center-left political parties. </p>
<p>Far from containing the seeds of its own destruction, capitalism in Europe and America had at last been harnessed in the broad public interest. The welfare state was spreading the good life. The bourgeoisie was doing well, but it was mostly well-behaved. Nobody was being “immiserated.” Political democracy was containing capitalist excess.</p>
<p>Meanwhile, nations that invoked Marx’s name were both economic failures and political hellholes. Far from Marx’s benign “dictatorship of the proletariat,” communist countries were ordinary despotisms, and corrupt to boot.</p>
<p>Well, what a difference a generation makes. Today, Marxian concepts that once sounded far-fetched or silly are pretty good descriptions of reality. </p>
<p>There is indeed a global reserve army of the unemployed, and it drags down wages generally. More and more working people are being dumped into a <em>lumpenproletariat </em>made up of would-be workers without regular jobs.</p>
<p>When I was in graduate school, I snickered at Marxists who described the state as “the executive committee of the ruling class.” Hadn’t they read their Galbraith? Didn’t they appreciate that the democratic state, along with the labor movement, were instruments of what Galbraith termed countervailing power? </p>
<p>The state was not captive to the ruling class. Since Roosevelt, it was a core institution that offset the influence of economic royalists.</p>
<p>Well, today the state has been pretty well captured by the Koch brothers and company. Goldman Sachs has provided five of the last six secretaries of the Treasury, under Democrats and Republicans alike. That sounds a lot more like an Executive Committee than Countervailing Power.</p>
<p><span class="pullquote-right">The postwar boom, rather than being a permanent refutation of Marx, was more like a fortunate historical blip—when the stars were aligned to regulate capitalism in the broad public interest. </span>But one bad decade, the 1970s, was sufficient to restore both capitalists and the ideology of raw, free-market capitalism its usual power—despite the verdict of history that raw capitalism keeps generating needless economic catastrophe. </p>
<p>The greatest of the 20th-century economists, John Maynard Keynes, demonstrated that this did not have to be so. With the right policy interventions, a basically capitalist economy could indeed be harnessed to serve the broad working public. </p>
<p>The postwar boom seemed to prove Keynes right. But one of Keynes’s lesser-known colleagues, the Polish-born economist Michal Kalecki, who located himself somewhere between Keynes and Marx, offered the following rebuttal: Even if it was possible as a matter of economics to harness a basically capitalist system to serve the broad mass of people, as a matter of politics the capitalist class would never let policymakers do it.</p>
<p>When Kalecki made that case in the mid-1940s, it looked as if Keynes had the better of the argument. But after four decades of the destruction of managed capitalism by resurgent business and banking elites, Kalecki looks prophetic.</p>
<p>This is not to say that Marx was prophetic, however. For Marx got one big thing wrong. Touchingly, he imagined that as capitalism became more and more destructive, the workers of the world would unite.</p>
<p>In fact, frustrated workers, whether in Poland, Hungary, Turkey, Britain, France, or the U.S., are not joining hands with their brothers and sisters in other lands. They are turning to neo-fascists at home. Poor Marx left out the appeal of ultra-nationalism.</p>
<p>Well, Happy Birthday, Karl. We can learn some things from you about capitalism’s multiple pathologies. But when it comes to devising a politics that will harness the market once again, so that ordinary people can benefit from all of the economy’s bounty and neo-fascists can return to their caves, we are on our own.</p>
<p><em>An <a href="https://www.huffingtonpost.com/entry/opinion-kuttner-marx-birthday_us_5aef7840e4b0c4f19323e376">earlier version</a> of this article appeared at</em>The Huffington Post. <em><a href="http://www.prospect.org/subscribe">Subscribe here</a>.</em></p>
</div></div></div>Tue, 08 May 2018 09:00:00 +0000230140 at http://prospect.orgRobert KuttnerIs Trump Capable of Realism on North Korea?http://prospect.org/article/trump-capable-realism-on-north-korea
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<p>North Korean leader Kim Jong Un and South Korean President Moon Jae-in shake hands after signing on a joint statement at the border village of Panmunjom in the Demilitarized Zone in South Korea.</p>
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<p><em>This article <a href="https://www.huffingtonpost.com/entry/opinion-kuttner-north-korea_us_5ae5de8fe4b04aa23f240c4c">originally appeared</a> at</em> The Huffington Post. <em><a href="http://www.prospect.org/subscribe">Subscribe here</a>.</em></p>
<p><span class="dropcap">I</span>n the afterglow of the summit between the leaders of North and South Korea, as we await the even more historic meeting between President <a data-beacon="{&quot;p&quot;:{&quot;lnid&quot;:&quot;Donald Trump&quot;,&quot;mpid&quot;:1,&quot;plid&quot;:&quot;https://www.huffingtonpost.com/topic/donald-trump&quot;}}" data-beacon-parsed="true" data-rapid-parsed="slk" data-rapid_p="1" data-v9y="1" data-ylk="subsec:paragraph;cpos:1;elm:context_link" href="https://www.huffingtonpost.com/topic/donald-trump">Donald Trump</a> and Pyongyang’s Kim Jong-un, there are three distinct risks. </p>
<p>One is that a genuine breakthrough occurs and Trump reaps the political credit. <em>The </em><em>New York Times</em>’s Maureen Dowd, tongue only partly in cheek, <a data-beacon="{&quot;p&quot;:{&quot;lnid&quot;:&quot;imagines Trump getting the Nobel Peace Prize&quot;,&quot;mpid&quot;:2,&quot;plid&quot;:&quot;https://www.nytimes.com/2018/04/28/opinion/sunday/trump-our-cartoon-nobel-laureate.html&quot;}}" data-beacon-parsed="true" data-rapid-parsed="slk" data-rapid_p="2" data-v9y="1" data-ylk="subsec:paragraph;cpos:2;elm:context_link" href="https://www.nytimes.com/2018/04/28/opinion/sunday/trump-our-cartoon-nobel-laureate.html">imagines Trump getting the Nobel Peace Prize</a>.</p>
<p>An opposite risk is that Trump wants a deal so badly that he is willing to be played for a fool. A number of conservative commentators have warned about this. <a data-beacon="{&quot;p&quot;:{&quot;lnid&quot;:&quot;Steven F. Hayes, in The Weekly Standard, warned&quot;,&quot;mpid&quot;:3,&quot;plid&quot;:&quot;https://www.weeklystandard.com/stephen-f.-hayes/first-the-victory-then-the-celebration&quot;}}" data-beacon-parsed="true" data-rapid-parsed="slk" data-rapid_p="3" data-v9y="1" data-ylk="subsec:paragraph;cpos:3;elm:context_link" href="https://www.weeklystandard.com/stephen-f.-hayes/first-the-victory-then-the-celebration">Steven F. Hayes, in <em>The Weekly Standard</em>, warned</a>, “Trump’s comments last week suggest he’s a sucker waiting to be played. The president volunteered that Kim Jong-un ‘has really been very open and I think very honorable based on what we are seeing.’ There is nothing remotely honorable about Kim Jong-un.”</p>
<p>A third risk is that Trump, in a moment of characteristic pique, will react badly to something Kim says at the summit and will walk out, undermining an admittedly long-shot chance to reduce tensions in one of the world’s most fraught regions.</p>
<p>And of course, with Trump you never know. Right after the North-South leaders’ summit, Trump did exactly the opposite of what any seasoned diplomat would advise him to do: He raised expectations sky high. Friday morning, <a data-beacon="{&quot;p&quot;:{&quot;lnid&quot;:&quot;Trump blurted out an imbecile tweet&quot;,&quot;mpid&quot;:4,&quot;plid&quot;:&quot;https://twitter.com/realdonaldtrump/status/989820401596366849&quot;}}" data-beacon-parsed="true" data-rapid-parsed="slk" data-rapid_p="4" data-v9y="1" data-ylk="subsec:paragraph;cpos:5;elm:context_link" href="https://twitter.com/realdonaldtrump/status/989820401596366849">Trump blurted out an imbecile tweet</a>: “KOREAN WAR TO END!!!!”</p>
<p>If things don’t go so smoothly, will he revert to insulting tweets about Little Rocket Man? Or will he even remember last week’s euphoric tweets?</p>
<p>Let’s get a grip and take a hard look at each of these risks. If a Korean peace process does move forward, history may give Trump a bit of credit for the use of nuclear bluster that suggested to Kim that Trump might be even crazier than Kim is. But it’s mainly other stars that are in rare alignment for a possible deal.</p>
<p>One of those stars is that economic sanctions have finally started to bite seriously on North Korea’s economy. Kim, a relatively new leader, would like to deliver greater prosperity to his long-suffering people, who are all too aware of the prodigious economy just across the 38th parallel to their south. Another star is the rare presence of a left-wing leader in South Korea, Moon Jae-in, who was willing to make overtures to the North, including an invitation for it to participate in the recent Winter Olympics.</p>
<p>Americans who have long been critical of the global overreach of the U.S. should welcome that the two main players in this diplomacy are North and South Korean leaders, who know far more about their divided country and have far higher stakes in a peace process than Washington does. Imagine the effrontery of the Koreans wanting to take matters into their own hands!</p>
<p><span class="pullquote-right">If some kind of a deal is indeed struck, this will be mainly a Korean show. Trump will only be able to bless it, or wreck it.</span></p>
<p>But what of the other risks? Despite the raised expectations, it’s clear that no final deal will come out of Trump’s meeting with Kim. The path toward a true rapprochement between the two Koreas, much less a nuclear-free peninsula, will be the product of complex ongoing diplomacy involving both the Koreans and the great powers as guarantors. As innumerable commentators have pointed out, North Korean leaders have dangled this offer before, only to pull it back each time.</p>
<p>The new role of the South and Kim’s desire for economic and diplomatic normalization makes a deal slightly more possible this time. But the details of what denuclearization really means, with what sort of inspection regime, remain the usual thorny ones.</p>
<p>And that brings up the other risk. The kind of deal required is all too reminiscent of a deal that Trump detests—the nuclear deal with Iran. North Korea, if anything, is far less trustworthy than Iran, and far more of a total dictatorship.</p>
<p>Granted, consistency is not exactly Trump’s strong suit, but would he really trust Kim to keep his word? And should he?</p>
<p>This era necessarily requires a brand of diplomacy based on the school of foreign policy known as realism. It means dealing pragmatically with regimes whose values you hate, because you lack the capacity to make over the world in the American image. </p>
<p>This represents a dramatic turn from the more idealistic visions of Bill Clinton and Barack Obama, who hoped to export democracy and human rights to the world, and a rejection of the regime-change visions of George W. Bush. But a foreign policy based on realism requires hard questions as well as deft, complex, and patient diplomacy—once again, not exactly Trump’s trademark.</p>
<p>Do we really want a détente with one of the most odious regimes in the world, North Korea, assuming we can get one? The sad answer is yes. We are not going to alter or destroy that regime, and some would argue that less isolation could moderate North Korea over time (though that hypothesis <a data-beacon="{&quot;p&quot;:{&quot;lnid&quot;:&quot;failed when it came to China&quot;,&quot;mpid&quot;:10,&quot;plid&quot;:&quot;https://www.huffingtonpost.com/entry/opinion-kuttner-china-hungary_us_5acb5e02e4b07a3485e69af6&quot;}}" data-beacon-parsed="true" data-rapid-parsed="slk" data-rapid_p="11" data-v9y="0" data-ylk="subsec:paragraph;cpos:17;elm:context_link" href="https://www.huffingtonpost.com/entry/opinion-kuttner-china-hungary_us_5acb5e02e4b07a3485e69af6">failed when it came to China</a>.)</p>
<p>The world today has scores of thuggish regimes. Some of these are our allies, such as Saudi Arabia and Turkey. We have an off-again, on-again intelligence partnership with Pakistan, which harbors radical Islamists. We can’t quite decide whether to swallow hard and live with a brutal regime in Syria or try to destroy it.</p>
<p>Despite Trump’s sheer cynicism—a precondition for a good Realist foreign policy (see Kissinger, Henry)—he is about the last leader in the world who can competently carry out such a policy. Take the case of his alliance with Vladimir Putin.</p>
<p>It would be one thing if Trump’s overtures to Putin were in service of a new, post-Gorbachev entente with an increasingly authoritarian Russia. We may not like Putin, but let’s recognize Russia’s legitimate interests, and damp down tensions. But that is not what’s occurring at all. Trump’s coddling of Russia began as sheer opportunism for his business empire and morphed into sheer opportunism to serve his political goals. The U.S. as a nation gets nothing in return—not even a respite from Kremlin election meddling.</p>
<p>The Korea peace process could go in any number of directions. One thing is clear: If it stays alive at all, it will take a long time. Hold that Nobel.</p>
</div></div></div>Tue, 01 May 2018 09:00:00 +0000230099 at http://prospect.orgRobert KuttnerHow the Tax Bill Backfired on the Republicanshttp://prospect.org/article/how-tax-bill-backfired-on-republicans
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<p><span class="dropcap">D</span>id you have a happy Tax Day? Are you feeling grateful for the Republican tax cut?</p>
<p>Evidently most American taxpayers <a href="https://finance.yahoo.com/news/trump-tax-cuts-flopping-181953692.html">are not</a>. </p>
<p>In a sublime case of poetic justice, the so-called Tax Cut and Jobs Act (TCJA) is backfiring on the Republicans big time. Most voters are unimpressed, and Republicans themselves are ceasing to emphasize it in their campaign material. </p>
<p>In the March 13 special election for the Pennsylvania 18th House district, where Democrat Conor Lamb narrowly beat Republican Rick Saccone, Republicans actually <a href="https://www.politico.com/story/2018/03/13/pennsylvania-special-election-preview-tax-republicans-458276">pulled ads</a>that bragged about the tax act, because their polls showed that it was more of a target than an achievement. </p>
<p>Republican strategists who wanted President Trump to emphasize the tax cut this spring were initially annoyed that Trump was talking about trade, immigration and Korea instead. Now they realize that Trump may be onto something.</p>
<p>Even better, Democrats are sensing that the tax issue can be turned against the Republicans big time in the 2018 and 2020 elections. This outcome is the <a href="http://www.democracycorps.com/attachments/article/1081/Dcor_AFT_April%20Tax%20Poll_Memo_4.11.2018_for%20web.pdf">result</a>of Republican overreach, opportunism, and sheer greed. </p>
<p>Previous Republican tax cuts, under Ronald Reagan, and George W. Bush, were also tilted to the top, but they made sure to include some real benefits for regular people. But this year’s bill was so heavily skewed to the wealthy that most people <a href="https://itep.org/how-much-will-typical-middle-class-workers-really-see-their-paychecks-change/">don’t see</a>more than trivial benefits in their paychecks. </p>
<p>In their excess, Republicans also managed to accomplish something—for their opposition—that has entirely eluded Democrats on tax politics since Reagan: total party unity. Reagan’s two big tax cuts in 1981 and 1986 peeled off lots of Democratic votes in Congress. Though the substance of the supply-side cuts was bogus, many Democrats figured that if the bill was going to pass anyway, they should share in the credit. The same thing happened with the Bush tax cuts of 2001 and 2003.</p>
<p>This time, however, the tax bill was both so extreme in its substance, and so purely partisan in the way it was enacted, that not a single Democrat in either house voted for it. </p>
<p>Republicans were counting on the sheer complexity of tax policy to put one over on the voters. But they missed one aspect: By increasing the deficit to the tune of some $1.5 trillion dollars over a decade, they were setting up demands for offsetting cuts in widely supported programs like Medicare and Social Security. And that’s easy to grasp.</p>
<p>Those calls are already coming, from Republicans who belatedly and disingenuously discovered the tax bill’s impact on the deficit. This presents a fat target for Democrats.</p>
<p>Some of the specific measures, such as the $10,000 limit on the deductibility of state sales and income taxes and local property taxes, were intended to punish voters in blue states with relatively progressive taxes and decent public services, such as New York, California, and several others. But there are at least twenty endangered Republican House members in such states and this spiteful provision paints a large target on their backs.</p>
<p>After the bill passed, many Democrats were initially gun-shy about making this a prime election issue, on the premise that tax cuts are invariably popular. But this tax cut isn’t.</p>
<p>The tax law also gives Democrats the chance to ask: what else might we do with $1.5 trillion dollars? For instance, a true invest-in-America program that rebuilds archaic infrastructure and creates lots of good jobs. Or substantial relief from crippling college debt. </p>
<p><span class="pullquote-right">On multiple levels, the tax act invites debates that play to the strength of Democrats.</span></p>
<p>Each claim in the Republican propaganda is phony. The growth stimulated by the bill will not enable the cuts to pay for themselves. The changes in the tax code are not increasing investment—mainly they are promoting more stock buybacks that artificially pump up share values and enrich the rich.</p>
<p>Far from creating incentives to reverse offshoring, the law actually enables corporations to pay a lower rate of tax on profits earned overseas. And despite a good deal of messaging by corporate allies of Trump claiming that worker raises and bonuses are the fruit of the tax cuts, the small number of raises <a href="https://www.forbes.com/sites/billconerly/2018/01/26/pay-raises-from-tax-cuts-are-fake-generosity/#e5ea0c82e826">are a pittance</a> compared to the tax savings. </p>
<p>Last week, headlines were made by the news that regulators had levied a billion dollar fine against Wells Fargo for its chronic frauds against its customers. That billion was <a href="https://www.vox.com/policy-and-politics/2018/4/21/17265796/wells-fargo-fine-cfpb-tax-cut">less than a third</a>of the money that Wells saves from the tax cut. </p>
<p>Republicans are supposed to be for fiscal balance. But when there is an opportunity to deliver trillion-dollar favors for corporations and the rich, deficits are no problem. </p>
<p>Republicans are allegedly for states rights. But this law overrides the ability of states to make their own choices about taxing and spending.</p>
<p>Republicans are supposed to be for economic efficiency. But this tax bill creates incentives for economically perverse activity such as stock buybacks and sheer gimmicks such as “pass through” entities where the point is not to improve the economy, merely to give the wealthy a tax break.</p>
<p>Trump promised to Make America Great Again. This law promotes more offshoring.</p>
<p>The law is such a political loser for Republicans, and the hypocrisy is so ripe, that one has to believe that Republicans sensed that this Congressional term was their last chance for a long while to grab whatever they could. They made few concessions to political realism. Republicans can expect a long period in the political wilderness, and this law will help bring that about.</p>
<p>The ancient Greeks held that character is fate. The tax act speaks volumes about the character of today’s Republican Party, and it will help seal the Party’s fate in coming elections. </p>
<p><em>An <a href="https://www.huffingtonpost.com/entry/opinion-kuttner-republicans-tax-cut_us_5add0678e4b089e33c8945fc">earlier version</a>of this article appeared at </em>The Huffington Post. <em><a href="http://www.prospect.org/subscribe">Subscribe here</a>.</em></p>
</div></div></div>Tue, 24 Apr 2018 13:44:26 +0000230072 at http://prospect.orgRobert KuttnerTrump’s Impotent Ragehttp://prospect.org/article/trumps-impotent-rage
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<p><span class="dropcap">S</span>omething very fishy happened last week. On Friday, we were treated to almost hourly rumors that President Donald Trump’s firing of Deputy Attorney General Rod Rosenstein was imminent. This was to be followed by a scheme to either fire or drastically limit the authority of Special Counsel Robert Mueller.</p>
<p>The cable channels went into overdrive and the newspapers picked up the story. Critics issued dire predictions.</p>
<p>And then exactly nothing happened. So what was that about?</p>
<p>Piecing this together, it’s clear that at midweek, my <a href="http://prospect.org/article/steve-bannon-unrepentant">old pal Steve Bannon</a> managed to get through to Trump, and pitched him on one more trademark Bannon scheme: Fire Rosenstein and cease cooperating with Mueller, citing executive privilege. Bannon also called on Trump to fire lawyer Ty Cobb.</p>
<p>This was <a href="https://www.washingtonpost.com/politics/bannon-pitches-white-house-on-plan-to-cripple-mueller-probe-and-protect-trump/2018/04/11/1ec5b1b2-3d9f-11e8-a7d1-e4efec6389f0_story.html?utm_term=.932f53e4df75">first reported by <em>The Washington Post</em></a>, and then <a href="http://thehill.com/homenews/administration/383060-the-memo-bannon-legal-move-causes-stir-among-trump-allies">other news media</a> <a href="https://www.cnn.com/2018/04/10/politics/trump-rod-rosenstein-robert-mueller/index.html">found sources</a> <a href="https://www.politico.com/story/2018/04/12/trump-rosenstein-meeting-firing-519210">to confirm</a> that Trump was livid and that the plan was under very serious consideration.</p>
<p>But Rosenstein is still there, and so is Mueller. On Sunday morning, White House Press Secretary Sarah Huckabee Sanders said she was <a href="https://www.politico.com/story/2018/04/15/sarah-sanders-mueller-rosenstein-524515">not aware</a> of any plans to fire either.</p>
<p>A prime source of the leaks that are keeping this tale alive was surely Bannon himself. He evidently hoped to jam Trump into going along with the scheme. I have not been able to confirm this with Bannon—he did not respond to my request for comment—but this is his signature modus operandi, and he went on the record with the <em>Post</em> to kick it off.</p>
<p><span class="pullquote-right">But as often happens with Bannon’s grand designs, this one backfired.</span> Dithering Republicans, including several senators, were quick to send clear messages to Trump that this move would mark the beginning of the end of his presidency.</p>
<p>For the first time, Senate Judiciary Chair Chuck Grassley <a href="https://www.nytimes.com/2018/04/11/us/politics/special-counsel-mueller-legislation-vote.html">agreed to fast-track</a> a bill protecting the independence of the special counsel. And one can only imagine how many Republican senators phoned Trump to warn in private what they have not said publicly.</p>
<p>Such a bill is unlikely to pass the diehard pro-Trump House of Representatives, but the threat to fire Rosenstein and Mueller put the Republican Congress in even more jeopardy, after a week in which House Speaker Paul Ryan, anticipating a November wipeout, announced that he will not run for re-election.</p>
<p>It’s also clear that the few remaining adults at the White House cautioned Trump not to move against Rosenstein.</p>
<p>Meanwhile, other events intruded to make the timing of any move to fire the special counsel even more ill-advised. A mother lode of presumably damaging material on Trump is now in the hands of the U.S. attorney in New York and the FBI, thanks to the recklessness of Trump’s longtime personal lawyer and fixer, Michael Cohen. The likelihood is that Cohen himself will face criminal charges and that many of his dealings with Trump are not protected by attorney-client privilege. </p>
<p>The publication of former FBI Director James Comey’s book and the explosive revelations in his interviews only put Trump more on the defensive. Name-calling and angry tweets do not add up to a credible rebuttal. Trump’s act is wearing thin.</p>
<p>Just to add to the complications this weekend, the pile-up of issues facing a president whose trademark is not exactly self-discipline included the bombing of targets in Syria and an apparent <a href="https://www.washingtonpost.com/news/worldviews/wp/2018/04/13/a-timeline-of-trumps-complicated-relationship-with-the-tpp/?utm_term=.dcf66f43c304">180-degree turn</a> on whether the United States should join the Trans-Pacific Partnership after all. </p>
<p>(The TPP, an initiative of Barack Obama, was long an object of Trump’s scorn. But now, pressure from the farm lobby has led to a pledge by Trump to reverse that decision. This would be one more big defeat for Bannon.)</p>
<p>In short, if ever there were window when Trump might have gotten away with a Saturday Night Massacre scenario of serial firings, that window has now slammed shut. The damage to Trump himself and to his remaining political support among election-anxious Republicans would far outweigh the gains.</p>
<p>Even without Mueller, the investigation fueled by everything that Mueller has already unearthed would live on, whether via the U.S. attorney’s office in New York, Congress, the Justice Department, or any of several state attorneys general. A president with broad political support might have illusions of quashing all such investigations, but Trump lacks the political support, and firing Rosenstein and Mueller would further erode what remains of his political backing, even among Republicans.</p>
<p>This also deepens a long-deferred crisis for the Republican Party. Until now, Republicans who are alarmed by Trump have been willing to go along with him because he has enabled them to enact longstanding ideological goals such as a tax cuts for the rich and massive deregulation of industry.</p>
<p>But with Trump flirting with placing himself above the law, Republicans are not only in a moral bind, but in a political bind. Part of their base will defend Trump no matter what, but many Republican leaders and voters consider firing Rosenstein and then Mueller to be a bright red line that Trump must not cross.</p>
<p>So Trump is damned either way. <span class="pullquote-right">If he fires Rosenstein and Mueller, he hastens his own downfall. If he lets things play out, the waters keep rising and soon more details will come out one way or another—which will also hasten his demise.</span></p>
<p>Impeachment is not yet explicitly on the political agenda, but it soon will be. Some Republicans have <a href="https://www.nytimes.com/2018/04/08/us/politics/trump-impeachment-midterms.html">used the threat of impeachment</a> as a political tactic to rally the hardcore Trump base. The problem is that even though Trump’s basic approval ratings still hover around 40 percent, only about half of that support is so hardcore that it will stick with Trump no matter what he does and no matter what details come out.</p>
<p>Steve Bannon is the gift that keeps on giving—to Democrats. Moreover, Bannon and Trump are right about one thing. The “deep state”—the layers of federalism, the separation of powers, the basic integrity of courts—are not going away. Trump can’t take over them all.</p>
<p>Trump’s impotent rage is a sign that he’s cornered, and he knows it.</p>
</div></div></div>Tue, 17 Apr 2018 09:00:04 +0000230023 at http://prospect.orgRobert KuttnerThe Failure of the Globalist Fantasyhttp://prospect.org/article/failure-globalist-fantasy
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<p><span class="dropcap">W</span>hat does the sweeping re-election victory of the neo-fascist Viktor Orbán in Hungary have to with the escalation of trade conflicts between the West and China?</p>
<p>Both are disastrous byproducts of a naïve faith that a push for free-market global capitalism would somehow increase the appeal of liberal democracy.</p>
<p>This was the hope in 1989 when the Berlin Wall came down and communism fell—a grand convergence of ever-freer markets and ever-stronger democratic institutions. This was also the hope when China was allowed to join the World Trade Organization in 2001, pretty much on in its own terms. China would become less totalitarian in its government and less statist in its economy. No less than <a href="https://www.amazon.com/Lexus-Olive-Tree-Understanding-Globalization/dp/1250013747">Tom Friedman proclaimed</a>, “China’s going to have a free press. Globalization will drive it.”</p>
<p>Neither fantasy has come true. In Western Europe and the U.S., the more that political and financial elites embraced hyper-global capitalism, the more they lost the support of the people. China, despite its greater exposure to world markets, has doubled down on both one-party dictatorship and state-led mercantilism.</p>
<p>In this super-global era, living standards for most working people in the West have stagnated and most gains have gone to the top. In nations like Hungary and Poland, which are doing well on average, inequality has risen and there is resentment of both reliance on foreign capital and of economic terms imposed from Brussels.</p>
<p>It was going to be so easy. Nations with ugly nationalistic ghosts, once communism fell, would gratefully join the family of democratic and capitalist nations.</p>
<p>But with hyper-globalism came hyper-inequality and hyper-insecurity for ordinary people. Establishment politicians offered few answers except to blame the people themselves for having insufficient skills.</p>
<p>People not only lost jobs; they lost respect. Those left behind were branded losers—except that losers voted. Into this vacuum marched Donald Trump, and ultra-nationalist figures like him all over Europe.</p>
<p>Flows of refugees compounded the damage, but the prime cause was economic. In the 1950s and 1960s, when economies were delivering broad prosperity, the nationalist far right had little appeal.</p>
<p>It is bad enough that neo-fascists with open contempt for democracy have gained broad popular support in countries with weak democratic roots such as Poland, Turkey, and Hungary. But far-right parties are now the second or third largest in most of Western Europe as well. In Germany, the neo-fascist AfD is now the largest opposition party (and third largest overall) in the parliament.</p>
<p>These movements did not come out of nowhere. Rather they were a reaction against the destruction of a social contract that once regulated capitalism and delivered broadly shared opportunity and prosperity.</p>
<p>Ultra-globalization was the instrument of this destruction, as global corporations and their political allies devised “trade” deals that were really deregulation deals. The idea was to make it harder for national governments to housebreak capitalism. When the backlash came, it wasn’t just against globalism, but against democracy itself, since these deals demolished popular trust in the entire political class.</p>
<p>All of this is the subject of my new book, <a href="https://robertkuttner.com/"><em>Can Democracy Survive Global Capitalism?</em></a>, published this week. Once, strong democracy tempered capitalism in a broad public interest. Now capitalism is overwhelming democracy—which takes a second hit when the common people turn to the far right.</p>
<p>To answer my own question: <span class="pullquote-right">Democracy <em>could</em> survive, if democracy once again is mobilized to temper raw capitalism.</span> But if we stay on the current path, crony capitalism will deepen its alliance with autocracy, ordinary people will continue to lose faith in the political center, and nationalistic, right-wing populism will keep gaining.</p>
<p>The rise of China, and a long-deferred clash with the U.S. now playing out in a game of chicken over tariff hikes, is the result of the same naïve faith in globalization.</p>
<p>As long ago as the 1980s and 1990s, it was all too clear what sort of game China was playing. China’s state capitalism put up barriers to imports and only allowed Western companies in on terms convenient to China. Meanwhile it flooded the world with subsidized exports.</p>
<p>As late as the Obama administration, the U.S. government refused to recognize the reality, even though it was hidden in plain view. The rather pathetic, now defunct Trans-Pacific Partnership was an effort to make deals with other nations rather than challenge China’s economic system as an assault on open markets.</p>
<p>Trump has belatedly changed the game plan, but in a ham-handed way. A competent trade diplomacy, with the U.S. working closely with Europe, could compel China to open more of its markets. But America can’t win a tit-for-tat, unilateral tariff war with China.</p>
<p>The naïve globalist fantasy lies in ruins. The sooner the political mainstream admits that, the greater chance we have to take the appeal away from Trump and his counterparts among Europe’s neo-fascists.</p>
<p>In fact, there is more than one form of globalism and more than one form of nationalism. The brand of globalism devised at the Bretton Woods conference of 1944, which ushered in 30 years of broad prosperity, was intended to limit the sway of global private capital and allow each nation to create social contracts that harnessed markets for the broad public good.</p>
<p>At the national level, the counterpart was a healthy form of nationalism that took pride in national democratic institutions and broadly shared prosperity. Leaders of that era knew all too well from the crash of 1929, and the Great Depression that followed, how untrammeled speculative capitalism leads to economic collapse, loss of faith in democracy, dictatorship, and war.</p>
<p>They were determined never to repeat that history. But here we are again.</p>
<p>In the U.S., there is good reason to expect that a blue wave will lead to the ouster of Trump and the Republicans. But the kind of Democrat who is elected is at least as important as whether a Democrat is elected. If we get more Wall Street Democrats, who ignore the increasing insecurity and disrespect to regular working people, we will only get more Trumps.</p>
<p>It’s a mistake to blame Trump on some kind of chronic fragility of democratic institutions. The culprit is letting market forces and corporate elites overwhelm society, to the detriment of ordinary people. The only thing that can reverse the trend is a resurgence of democracy, as powerful as the resurgence of raw capitalism that has characterized the past several decades.</p>
<p><em>An <a href="https://www.huffingtonpost.com/entry/opinion-kuttner-china-hungary_us_5acb5e02e4b07a3485e69af6">earlier version</a> of this article appeared at</em> The Huffington Post. <em><a href="http://www.prospect.org/subscribe">Subscribe here</a>.</em></p>
</div></div></div>Tue, 10 Apr 2018 09:00:00 +0000229960 at http://prospect.orgRobert KuttnerMartin Luther King Jr. 50 Years Afterhttp://prospect.org/article/martin-luther-king-jr-50-years-after
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<p><span class="dropcap">A</span>s we mark the 50th anniversary of the murder of Martin Luther King, Jr., let’s recall two paradoxical things about MLK. Despite attempts to airbrush him into a benign idealist who had a dream, King never stopped being a radical. And despite the fact that his was above all a crusade for racial justice, he understood that racial progress required racial coalition.</p>
<p>King especially appreciated that the next great struggle had to be economic. The full name of the famous August 1963 march on Washington was the March for Jobs and Freedom. When King was murdered on April 4, 1968, he was in Memphis to march with striking sanitation workers, most of whom were black, but he was increasingly looking to class to help overcome barriers of race.</p>
<p>At times, King used rhetoric that today might be considered a reminder of “white privilege” and even a call for reparations. King could give a powerful speech reminding his listeners of all the ways that government, going back to the Homestead Acts and land-grant colleges of the 1860s, had intervened to subsidize white people, concluding, “<a href="https://www.youtube.com/watch?v=pLV5y4utPKI">we are coming to get our check</a>.”</p>
<p>But King could appreciate that a call for common uplift was also a better politics:</p>
<p>Rejecting proposals for a “Bill of Rights for the Negro,” King <a href="https://newrepublic.com/article/97096/still-house-divided-desmond-king-rogers-smith">suggested instead</a> a “Bill of Rights for the Disadvantaged.”</p>
<p>King wrote: “While Negroes form the vast majority of America’s disadvantaged, there are millions of white poor who would also benefit.” He added,</p>
<p style="margin-left:.5in;">many white workers whose economic condition is not too far removed from the economic condition of his black brother, will find it difficult to accept a ‘Negro Bill of Rights’ which seeks to give special consideration to the Negro in the context of unemployment, joblessness etc. and does not take into sufficient account [the white worker’s] plight.</p>
<p>When I graduated from Oberlin in 1965, King was our commencement speaker. That was the spring of the march from Selma to Montgomery and Lyndon Johnson’s astonishing “<a href="https://www.thenation.com/article/march-15-1965-lyndon-johnsons-we-shall-overcome-speech/">We Shall Overcome</a>” speech. The Civil Rights Act of 1964 had just been passed. Not long afterwards, Congress would finally pass the Voting Rights Act.</p>
<p><a href="http://www2.oberlin.edu/external/EOG/BlackHistoryMonth/MLK/CommAddress.html">King warned</a> that the nation had a long way to go. “For while we are quite successful in breaking down the legal barriers to segregation, the Negro is now confronting social and economic barriers which are very real,” he said. Yet King was emphatic that the struggle for racial justice had to be a struggle for universal justice.</p>
<p>“A doctrine of black supremacy is as dangerous as a doctrine of white supremacy. God is not interested in the freedom of black men or brown men or yellow men. God is interested in the freedom of the whole human race, the creation of a society where every man will respect the dignity and worth of personality.”</p>
<p>Fifty years have gone by since his death. And far too little has changed—or has even changed for the worse. Police still kill young black men with impunity. In King’s era, blacks could be arrested or killed in the South for trying to exercise their civil rights. Today, they can be arrested or killed in the North for walking down the street.</p>
<p>Fifty years ago, much was left undone, but we had a national government and federal courts committed to advancing racial justice. Today, the Supreme Court has gutted the enforcement mechanism of the Voting Rights Act; and instead of a Justice Department resisting state and local efforts at black voter suppression, Trump’s Justice Department operates as enabler.</p>
<p><span class="pullquote-right">The year 1968 was also the year that Congress passed the Fair Housing Act. But our neighborhoods are almost as racially segregated as ever.</span></p>
<p>The mortgage collapse of 2008, caused by subprime mortgages targeted substantially at black home ownership, wiped out much of the black home equity that had been built up over decades. And it devastated many working-class white homeowners as well.</p>
<p>In King’s day, a majority of whites found him too radical, while some black separatists considered him not radical enough. But history suggests that King got the delicate balance about right.</p>
<p>Today, when a broad coalition is needed more than ever, the relative roles and responsibilities of black and white leadership continue to provoke dissention. More than ever, we need a politics of both/and.</p>
<p>America may soon become a “majority-minority” country, but that cannot mean a politics of writing off the white poor. But neither can the desire for coalition become an alibi for excusing white racism.</p>
<p>Fortunately, there are myriad efforts to bridge racial division and increase trans- racial compassion, groups with names like <a href="http://comingtothetable.org/">Coming to the Table</a> and the national initiative of the <a href="https://www.wkkf.org/what-we-do/racial-equity/truth-racial-healing-transformation">Kellogg Foundation on Truth, Racial Healing, and Transformation</a>.</p>
<p>Groups such as Black Lives Matter are right to ask that whites look deeper into their own hearts and histories, and appreciate a history of black suppression and white privilege. Any white person, even a relative newcomer to America, is surfing on a legacy of laws and policies that long gave preference to whites over blacks and protects whites from random police excesses.</p>
<p>But this doesn’t mean that a rhetoric of “white privilege” or “reparations” is useful as general political language. Most whites are prepared to accept that African Americans are owed compensatory policies, but not prepared to accept a politics of collective guilt.</p>
<p>As Richard Kallenberg of the Century Foundation reminds us in <a href="https://tcf.org/content/report/inclusive-populism-robert-f-kennedy/">a recent report</a>,</p>
<p>despite a racially reactionary Republican Party, American public attitudes are actually far less racist than they were in the 1960s at the time of King’s murder:</p>
<p style="margin-left:.5in;">In 1967, 27 percent of whites thought blacks and whites should go to separate schools, a figure that dropped to 4 percent by 1995, after which point the question stopped being asked. In 1967, about half (48 percent) of whites said they would not vote for a “generally well qualified” black candidate, a figure that declined to 5 percent by 1997. In 1968, a solid majority (56 percent) said there should be laws against intermarriage between blacks and whites, a figure that dropped to 10 percent by 2002. Fully 73 percent of whites in 1972 said they disapproved of interracial marriage; by 2011, <a href="http://igpa.uillinois.edu/programs/racial-attitudes">the number had plummeted to 14 percent</a>.</p>
<p>The successes of the 1960s were built one part on the courage of the movement on the ground and its sometimes contentious coalition of black and white activists; one part an alliance with a friendly national administration; one part a capacity to shame other whites into accepting that the civil rights revolution was the right thing to do; and one part using the power of law to crush white racism when shaming failed.</p>
<p>Each generation needs to discover MLK’s truths in its own way. For instance, the March for Our Lives and the gathering movement against gun violence, initiated by relatively affluent high school students from Parkland, was at risk of taking the spotlight away from the gun violence that has ravaged black communities, including police violence. But these groups have been able to <a href="http://www.philly.com/philly/news/march-for-our-lives-philadelphia-black-brown-gun-violence-shootings-naomi-wadler-20180326.html">come together</a>, with compassion and solidarity.</p>
<p>The best way to honor King’s memory would be to rebuild a movement in his spirit.</p>
<p>That may sound odd in the era of Donald Trump. And yet he could be our best ally.</p>
<p>Today, Trump is serving to unite decent Americans of all races into a movement for social justice. All movements are messy, and no less this one.</p>
<p>Martin Luther King Jr. was a prophet, but above all he was a strategist. That legacy is just as important as his moral legacy. </p>
<p><em>An <a href="https://www.huffingtonpost.com/entry/opinion-kuttner-mlk-politics_us_5ac2296ce4b055e50acf2a93">earlier version</a> of this article appeared at </em>The Huffington Post.<em> <a href="http://www.prospect.org/subscribe">Subscribe here</a>. </em></p>
</div></div></div>Tue, 03 Apr 2018 09:00:00 +0000229904 at http://prospect.orgRobert KuttnerThe Face(book) of Big Brotherhttp://prospect.org/article/facebook-big-brother
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<p><span class="dropcap">I</span>magine that Jimmy Wales and the other good people who built Wikipedia had also created a free, non-commercial version of Facebook; call it Wikiface. People could use it to stay in touch with family and friends, to pass along items that they found interesting, and create networks of common interest.</p>
<p>But there would be no commercial exploitation of people’s data, no political use of data other than voluntary self-directed groups, and limits to using artificially amplified posts for orchestrated hype. Nobody would get filthy rich from selling your confidential information. Just as Wikipedia is policed for accuracy and for abuses, by a kind of peer-review, so would be this new nonprofit social medium.</p>
<p>This was the original dream of social media. There have been a few halting attempts to create nonprofit social networking platforms, but they have gained little traction. A for-profit competitor to Facebook called MeWe emphasizes total privacy and makes its money by offering optional services. MeWe, according to CEO Mark Weinstein, just passed the million-member mark.</p>
<p>But Facebook totally dominates. “People don’t appreciate that Facebook is a data company, not a social network,” says Weinstein. “Its members are not customers to serve, its members are products to sell. Every decision made is a data decision.”</p>
<p>Facebook “privacy” settings merely restrict the access of the general public to your Facebook feed. They do not alter Facebook’s own unlimited freedom to monitor, sort, package and sell your data—and sell you out.</p>
<p>(Conversely, imagine if Mark Zuckerberg and his crew of predators had gotten to the universal free encyclopedia project before Wikipedia did. Searches would still be “free,” but the trail of your research would be fair game for marketers, politicians, spies, cops, and worse.)</p>
<p>Social media, with a few exceptions, have morphed into a realm of near-total toxicity. They rip off our desire to be connected. They amplify our most tawdry self-promotion impulses. They magnify a poisonous descent into tribalism at the expense of democracy. Our democracy is further debased by the use of social media to create micro-targeted negative ads, not to mention entire fake organizations.</p>
<p>They also intensify our obsession with screens, to the detriment of real social competence, beginning with two-year-olds. While they steal our privacy for pseudo-networking and commercial gain, they purloin the work of true providers of content like newspapers, threatening their very financial existence.</p>
<p>At bottom, they have been invaders of privacy far more insidious than the NSA or the CIA. In the latest <em>New Yorker</em>, David Remnick <a href="https://www.newyorker.com/magazine/2018/04/02/cambridge-analytica-and-a-moral-reckoning-in-silicon-valley">aptly quotes</a> the novelist and critic John Lanchester, who termed Facebook, “the biggest surveillance-based enterprise in the history of mankind.”</p>
<p>And it’s not just Facebook. The entire model of 21st-century American capitalism is based on the premise that almost anything you do online is fair game to be harvested, “curated,” and sold. Buy something from one of the Fortune 1000 companies, and that information goes right back into the master file.</p>
<p>Liberals and conservative libertarians have long been wary of Big Brother—snooping by government. But in the Facebook era, Big Brother is the private, social-media sector.</p>
<p>All of this was at a simmer before Facebook turned out to be a prime enabler Russian hacking of the 2016 election, with an assist from Cambridge Analytica and associates of Donald Trump. That episode, with the full complicity of Facebook, breached the data of some 50 million users.</p>
<p>And Mark Zuckerberg, in damage-control mode, still has the nerve to piously <a href="https://www.facebook.com/notes/mark-zuckerberg/building-global-community/10154544292806634">describe</a> all this as “building global community.”</p>
<p>About the only good thing about this latest twist is that it elevates the smarmy Zuckerberg to one of America’s Most Loathed, and shines a more intense critical spotlight on Facebook’s doings—and opens the door to serious regulation. In an era of hyper-partisanship, one of the few things Republicans and Democrats seem to be able to agree on is that Zuckerberg is a sanctimonious and hypocritical con man. (How fitting that the two bookends of this era are Zuckerberg and Trump.)</p>
<p>Events are moving so fast, and public opinion is so rapidly shifting against Facebook, that Zuckerberg, who has long resisted demands that he put his house in order, is now fairly begging to be allowed to be self-police. He <a href="http://money.cnn.com/2018/03/22/news/companies/best-lines-zuckerberg-interview/index.html">told</a> CNN last week that he’d be open to some form of regulation.</p>
<p>We should not trust Facebook self-policing for one instant. But what would a public regulatory regime look like? The question becomes more complicated as we witness the tangled intersection of privacy concerns with national security concerns.</p>
<p>The Federal Trade Commission has authority that it has mostly failed to use. In 2011, the FTC went after Facebook for failing to keep its privacy commitments. The company allowed third party clients to mine data not just of Facebook users, but of their “friends.” This is basically what happened, on a far larger scale—with Cambridge Analytica.</p>
<p>The FTC has <a href="https://www.ftc.gov/news-events/press-releases/2018/03/statement-acting-director-ftcs-bureau-consumer-protection">opened</a> an investigation, and in theory <a href="https://www.wired.com/story/what-would-regulating-facebook-look-like/">could fine</a> Facebook $40,000 for each violation of the privacy rights of the 50 million people whose privacy was breached in that debacle—enough to put Facebook out of business.</p>
<p><span class="pullquote-right">In an era of hyper-partisanship, the revulsion against Facebook might yield a window of cross-partisan progress.</span> Republicans don’t like regulation and liked the results of the hacking in 2016—but they like Mark Zuckerberg even less. Tougher regulation was resisted by the Obama administration. But Democrats, who tend to cut Silicon Valley donors a lot of slack, are plainly disgusted.</p>
<p>Last week, Facebook stock plunged, cutting its total value by $58 billion. It’s still worth $476 billion, more than the GDP of most countries. We can expect a massive Facebook counter-offensive, with the usual pious blarney, plus gazillions of dollars of campaign contributions.</p>
<p>This is the <a href="https://www.ftc.gov/news-events/press-releases/2018/03/statement-acting-director-ftcs-bureau-consumer-protection">cyber equivalent</a> of March for our Lives versus the NRA. Only an army of outraged citizens can face down the billions that Facebook has to buy politicians.</p>
<p>Proposed legislation to require greater disclosure of Facebook ads is <a href="http://www.klobuchar.senate.gov/public/index.cfm/2017/10/klobuchar-warner-mccain-introduce-legislation-to-improve-national-security-and-protect-integrity-of-u-s-elections-by-bringing-transparency-and-accountability-to-online-political-ads">sponsored</a> jointly by Democrats Amy Klobuchar and Mark Warner and Republican John McCain. This is just a start, and Klobuchar has already said she wants to go further.</p>
<p>A better approach is the EU’s <a href="https://www.wired.com/story/europes-new-privacy-law-will-change-the-web-and-more/">General Data Protection Regulation</a>, which takes effect May 25. GDPR basically requires far more disclosure, and tries to restrict invasions of privacy, not just by Facebook, but by Big Data in general.</p>
<p>Skeptics worry that Facebook will find workarounds that preserve its basic ability to tabulate and sell users’ data. But Europe, unlike the U.S., has a robust privacy lobby that includes many EU member governments. And if Facebook and the gang try to game the system, regulation will likely be toughened.</p>
<p>A good start in the U.S. would be drastic fines by the FTC for data breaches enabled or tolerated by Facebook. We also need to enforce the anti-trust laws. Part of Facebook’s business model is to snap up potential rivals that might threaten its network dominance, like Instagram (a billion) and WhatsApp ($19 billion). It’s preposterous that these acquisitions have been allowed.</p>
<p>Yes, some uses of Facebook are valid and valuable. The successful West Virginia teachers’ strike relied heavily on Facebook, as do many legitimate affinity groups.</p>
<p>But uses like these are totally consistent with the prohibition of commercial sale of users’ data.</p>
<p>An even tougher question is the regulation of Facebook and company for national security purposes. When Facebook becomes an enabler of Putin’s efforts to destroy American democracy, what’s the right remedy?</p>
<p>It’s bad enough that Facebook invades our privacy. Do we want Facebook collaborating with the NSA, the Pentagon and the Department of Homeland Security to protect us from Russian troll farms—and at the same time passing along data on us?</p>
<p>Who do we trust less—Zuckerberg or the government spy agencies? Who watches the watchers? This dilemma takes the privacy/security conundrum to a whole new level. As Senator Sheldon Whitehouse, a Rhode Island Democrat on the subcommittee on Privacy, Technology, and the Law, told me, “This is terra incognita.”</p>
<p>It is indeed, but at least public opinion is shifting and legislators are beginning to ask the right questions. If Facebook is prohibited from treating our personal data as a commodity at all, that also short circuits Facebook’s ability to sell it to Putin or to Trump. Clamp down on the commercial abuses of Big Data, and we can back to the task of protecting ourselves from government snooping.</p>
<p><em>An <a href="https://www.huffingtonpost.com/entry/opinion-kuttner-facebook-regulation_us_5ab7ec8be4b054d118e41c76">earlier version</a> of this article appeared at</em> The Huffington Post. <em><a href="http://www.prospect.org/subscribe">Subscribe here</a>.</em></p>
</div></div></div>Tue, 27 Mar 2018 09:00:00 +0000229854 at http://prospect.orgRobert KuttnerPete Peterson Meets St. Peterhttp://prospect.org/article/pete-peterson-meets-st-peter
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<p>Peter G. Peterson, Chairman of the Peter G. Peterson Foundation, attends a meeting of the Economic Club of New York</p>
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<p><em>Editors' Note: Peter G. Peterson passed away on March 20. </em><em><a href="http://prospect.ngpvanhost.com/form/-2053095403424774144">Sign up here</a> to receive exclusive, daily writing from Bob Kuttner and Harold Meyerson straight to your inbox.</em></p>
<p><span class="dropcap">N</span><em>ame, Please?</em></p>
<p>Peter G. Peterson.</p>
<p><em>And what makes you think you deserve admission to the Pearly Gates?</em></p>
<p>I’ve led a virtuous life, made billions, and gave most of it to charity.</p>
<p><em>What sort of charity?</em></p>
<p>Well, I gave over $1 billion to create the Peter G. Peterson Foundation, to warn Americans about the dangers of deficits and debts, and the excesses of Social Security and Medicare.</p>
<p><em>Yes? And where’s the charity part?</em></p>
<p>Too much spending will bankrupt America, especially the dreams of the young.</p>
<p><em>I’m just a saint, not an economist. But are you saying that it’s Social Security and Medicare that are destroying the life chances of the young, rather than—oh, I don’t know—college debt, insecure jobs, unaffordable housing, the very rich taking more than their share? </em></p>
<p>My one regret on Earth was that the young people just wouldn’t listen to what I was telling them.</p>
<p><em>And where did you say you made your money?</em></p>
<p>That would be private equity.</p>
<p><em>We have a saying around here: It’s easier for a camel to go through the eye of a needle than— </em></p>
<p>I know … than for a rich man to enter the Kingdom of Heaven.</p>
<p><em>You’ve heard that one.</em></p>
<p>Yes, and I thought that if I just warned people against the perils of Social Security and Medicare, the Almighty would appreciate my virtue.</p>
<p><em>It’s kind of a stretch, Pete.</em></p>
<p>Well, do you mind if I ask you a few questions?</p>
<p><em>Sure, fire away.</em></p>
<p>It looks pretty fine up here. Who pays for all of this?</p>
<p><em>The Almighty forgives us our debts, as we forgive our debtors.</em></p>
<p>Don’t you think that’s kind of profligate?</p>
<p><em>Well, we do have other, more austere quarters that might suit you a lot better.</em></p>
</div></div></div>Wed, 21 Mar 2018 18:16:40 +0000229805 at http://prospect.orgRobert KuttnerPutin, Trump, and Cold War IIhttp://prospect.org/article/putin-trump-and-cold-war-ii
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<p>Russian President Vladimir Putin gestures during a news conference after meeting with his staff at the campaign headquarters in Moscow</p>
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<p><span class="dropcap">I</span>n the past month, we’ve learned that 13 Russian officials and three Kremlin-linked agencies <a href="https://www.documentcloud.org/documents/4380529-Internet-Research-Agency-Indictment.html">were involved</a> in 2016 election trolling and hacking, to a sufficient degree to indict them; that the Kremlin was almost certainly behind the assassination attempt on a Russian former double agent living in Britain; and that Russian cyber-war agencies penetrated vital US electrical and other infrastructure systems, and could have shut them down.</p>
<p>That latest finding, <a href="https://www.us-cert.gov/ncas/alerts/TA18-074A">reported</a> last week by the FBI and the Department of Homeland Security, was sufficiently alarming that even the Trump White House bleated a mild protest, for the very first time. And the Trump administration joined Britain and other allies in condemning the attempted hit job.</p>
<p>Three things are now clear. First, Vladimir Putin has crossed a bright red line and is waging an aggressive Cold War II against the U.S. and the West, using multiple forms cyber-warfare as well as assassinations using nerve agents banned by treaties.</p>
<p>Secondly, counter-measures within the cyber-realm are not sufficient. There are simply too many ways to penetrate, too many constantly mutating strategies to try out.</p>
<p>And to the extent that U.S. social media platforms are used by the Russians, Facebook and others have been stunningly unhelpful in aiding the effort to shut the Russians down. Mark Zuckerberg is <a href="https://www.wired.com/story/inside-facebook-mark-zuckerberg-2-years-of-hell/">far more zealous</a> about defending his business strategy of using proprietary algorithms to invade users’ privacy and to maximize profits than about helping to defend his country.</p>
<p>In the <a href="https://www.nytimes.com/2018/03/18/us/cambridge-analytica-facebook-privacy-data.html">latest revelations</a>, of Cambridge Analytica’s misuse of data from 50 million Facebook accounts to hack the 2016 campaign, Zuckerberg has been more concerned about covering his butt than about helping investigators get to the bottom of what happened and making sure it never happens again.</p>
<p>Facebook keeps scooping up the world’s smartest cyber scientists and cutting-edge artificial intelligence geniuses at large salaries, and may well be better at this than the NSA or the Pentagon’s Cyber Command, according to one senior person whom I interviewed on background. The issue of how government and Facebook should interact is tricky, but Zuckerberg’s behavior is drastically at odds with the close working relationship between the Pentagon, the intelligence agencies, and others in the private sector with sensitive roles in the national defense.</p>
<p>In short, trying to play pure defense again aggressive Russian cyber attacks is like playing whack-a-mole. Yet that has been the premise of recent congressional hearings <a href="https://www.c-span.org/video/?442611-1/nsa-nominee-lieutenant-general-paul-nakasone-testifies-confirmation-hearing">questioning</a> General Paul Nakasone, head of Cyber Command and nominee to head the NSA.</p>
<p>It’s also clear that the mild sanctions imposed by British Prime Minister Teresa May, like those imposed by President Obama late in 2016 after U.S. intelligence agencies confirmed the Kremlin role in trolling, are treated by Putin as a mild inconvenience.</p>
<p>Ousting a few diplomats, blocking a few bank accounts, or making a few Russian oligarchs persona non grata confirm to Putin that the West is a sitting duck, too weak to rise to its own defense.</p>
<p>Yes, we need stronger and more sophisticated cyber defenses. Vital civilian infrastructure, as in the case of nuclear weapons, may need to be disconnected from the internet to harden it against penetrations. But one person—Vladimir Putin—has decided to wage Cold War II, and that same one person has the power to reverse course. </p>
<p>This is one of those fateful confrontations between Russia and the West, like the Berlin blockade of 1948, or the Cuban Missile Crisis of 1962. It doesn’t feel like one because it lacks a dramatic showdown event. The fact that it is insidious, gradual, and hydra-headed only makes it more of a threat.</p>
<p>But there are several ways that the West could raise the costs to Putin to the point where serous conversations about de-escalation could begin. The common theme is this: Normal states do not make-cyber war on each other’s vital systems. If Putin is going to behave like a pariah nation, Russia will be treated like a pariah nation.</p>
<p>That doesn’t mean threating to shut down Russia’s electrical system in a game of cyber-tit-for-tat, a strategy that would be as risky as it would be futile. It does mean threatening Russia’s vital interests in other areas there the West has the power to deliver and Russia has the weaker hand.</p>
<p>For instance—Russia is dependent on access to the West’s banking system. That could be cut off, as it was during the Cold War.</p>
<p>Russian business interests are shockingly free to invest in the West at will, to buy real estate, often with shell companies to hide assets. That could be closed down, as well.</p>
<p>Russians are free to travel to the West. That could also be limited.</p>
<p>Obviously, not all of these sanctions should be imposed at once. But they should be on the table, and serious level de-escalation talks should commence.</p>
<p>What’s needed is an engagement with Putin at the highest level, to address Russia’s legitimate concerns for its own security, to make clear what actions will not be tolerated, to move the two superpowers back from the brink and safeguard American democracy.</p>
<p>But here’s the worst part of the story. About the last person on earth likely to consider this course is the current president of the United States. Putin is able to escalate these incursions because of one man: Donald J. Trump.</p>
<p><span class="pullquote-right">A normal president might be a little slow or a little risk averse, but eventually a normal president would appreciate the scale of the threat and pursue an appropriately tough diplomacy.</span></p>
<p>But the Russians, all too accurately, view Trump as their stooge. He epitomizes corrupt interlocks between oligarchs and the state, as well as interlocks between Russia and Trump himself. He both mirrors the Russian system, and is its captive.</p>
<p>We don’t yet have all the details. We may soon get more of them from the Mueller investigation. But either the Russians have enough on Trump to blackmail him, or his business interests are so thoroughly entangled with those of oligarchs close to Putin, or he owes Putin and his cronies big time for past favors—or all three.</p>
<p>I am aware that I am playing against type by arguing this case. As a progressive, I am all too aware that the U.S. does not have clean hands—America has a long history of destabilizing and even overthrowing regimes that it doesn’t like. </p>
<p>I am also aware of the terrible costs of war, even cold war, and am not one to suggest military escalation lightly. I spent my youth opposing the Vietnam War. But then, Ho Chi Minh was not an existential threat to the U.S. If he had been, the U.S. would not be having happy commercial and diplomatic relations with the People’s Republic of Vietnam today.</p>
<p>But Russia’s actions do pose an existential threat both for American democracy and for America’s basic physical security. It’s true that our own hands are far from clean. But America is still far more of a democracy than Putin’s Russia; and America’s core security must be defended.</p>
<p>Even though the president makes foreign policy, there is a major role for Democrats in confronting the Kremlin. By demanding that America get serious about Putin with a diplomacy that he will take seriously, Democrats demonstrate that are more patriotic and more reliable on national security than Donald Trump. They hit Trump where he is most vulnerable—where his personal corruption meets his willingness to sell out his country. And they split the Republican Party.</p>
<p>Maybe they can even pressure Trump to be more assertive. If America is under siege by the Kremlin, how can it be great again?</p>
<p>This is one of those moments where smart politics is also the right thing to so. Some day, Trump will be gone, and we can get serious about defending our country.</p>
<p><em>An <a href="https://www.huffingtonpost.com/entry/opinion-kuttner-russia-cyberhacking_us_5aaea8c9e4b0c33361b1a56a">earlier version</a> of this article appeared at</em> The Huffington Post<em>. <a href="http://www.prospect.org/subscribe">Subscribe here</a>. </em></p>
</div></div></div>Tue, 20 Mar 2018 09:00:00 +0000229784 at http://prospect.orgRobert KuttnerHow the Globalists Ceded the Field to Donald Trumphttp://prospect.org/article/how-globalists-ceded-field-donald-trump
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p><em>This article appears in the Spring 2018 issue of</em> The American Prospect <em>magazine. <a href="http://www.prospect.org/subscribe">Subscribe here</a>.</em></p>
<p><span class="dropcap">W</span>hen it comes to grasping the dynamics of globalization and the backlash against it, the media depiction of Donald Trump’s tariff wars revealed that the trade mainstream is as crackpot in its own way as Trump is—and that Trump is the beneficiary of their myopia. Let me explain.</p>
<p>For three decades, the presidential wing of both U.S. parties, cheered on by orthodox economists and financial elites, has sponsored a brand of globalization that serves corporations and bankers but ignores the impact on regular people. This disparate impact is invariably swept aside with the usual platitudes about free trade being efficient and protectionism being narrow-minded and economically irrational. We were treated to those homilies, ad nauseam, after Trump imposed tariffs on steel and aluminum.</p>
<p>What’s forgotten is the fact that there is more than one form of globalism. In contrast to today’s brand, the global economic system devised at Bretton Woods in 1944 was a radical break with laissez-faire. The founders of the postwar system had vivid memories of the bitter fruits of rampant capitalism—depression, fascism, and war. They wanted to build a stable and egalitarian form of mixed economy, so that this history would never be repeated. But tragically, it is being repeated today, as global markets run riot and seed neo-fascist backlash.</p>
<p>It was no accident that the chief architect of Bretton Woods was John Maynard Keynes. The global architecture invented at Bretton Woods was intended to complement and bolster high-growth, full-employment economies at home. Private financial speculation was contained and reconstruction funds were substantially public. For three decades, the West combined high rates of growth with increasing equality and security for ordinary citizens.</p>
<p>But a major shift in both power and dominant ideology has turned the global marketplace back into something more like the pre-Roosevelt system. “Trade” deals have been deployed to dismantle managed capitalism. Working people have not only suffered; they have lost confidence in globalist elites—and worse, in government itself and even in democracy.</p>
<p>This is a system-wide pathology. That’s why the backlash, and the embrace of ultra-nationalist strongmen, looks so similar throughout the West. <span class="pullquote">The more that <em>bien pensants </em>double down on globalization, the more defections they invite and the more leaders like Trump we get.</span></p>
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<p><strong>THIS HISTORY IS </strong>the subject of my recent book, <em>Can Democracy Survive Global Capitalism? </em>As I observe, the postwar social contract was unique in the history of capitalism—a combination of lucky accidents and power shifts. These included the disgrace of laissez-faire and the Republican Party in the Great Crash; the radicalism of Franklin Roosevelt; the enhanced prestige of government in surmounting depression and winning World War II (in a country normally suspicious of the state); the legacy of wartime planning; the enhanced power of organized labor and the regulatory repression of organized capital; the role of the dollar in a fixed–exchange rate system; and the threat of Bolshevism, which made America urgently supportive of European reconstruction using substantial state-led planning.</p>
<p>The postwar experience demonstrated that a mixed economy can be more socially just <em>and</em> more economically efficient than a laissez-faire one. We assumed that this revolution in economic theory and policy was permanent and the new normal. But we overlooked the latent power of capital in an economy that remains fundamentally capitalist. When bankers and corporations regained their usual political power in the aftermath of the economic turmoil of the 1970s, they were able to overturn much of managed capitalism.</p>
<p>The new globalism—the use of “trade” deals to undermine domestic regulation and worker protections—became a key instrument. Policy elites were oblivious to the slowly building political consequences, which culminated in the election of Trump and his counterparts. Marxists used to assume that the excesses of capitalism would unite workers of the world. History shows that the result is more typically an embrace of fascism.</p>
<p>In short, the entire paradigm of “free trade” as optimum is wrong. No sane progressive has ever pursued the freest possible market as an end in itself.</p>
<p>The diatribes against “protectionism” are oblivious to economic history in another respect. Every major industrial power, including 19th-century America, has used flagrant departures from laissez-faire—protection—to develop its industrial base. These include subsidies, public investments, preferential procurement, and of course tariffs. The idea that a tariff is inefficient relies on a static snapshot, rather than an appreciation of the dynamic value of gaining industrial proficiency over time.</p>
<p>If Japan had followed the advice of free-traders in the 1950s, and exported products in which it then had an advantage (such as cheap toys) while purchasing industrial goods that it didn’t produce from the United States, Japan never would have developed its prodigious success in cars, steel, semiconductors, machine tools, and the entire range of advanced producer and consumer goods. All of these required protection. Japan used a system of cartels, subsidy of exports, restriction of imports and other devices to make it just about impossible for major U.S. producers to sell in Japan. But when Congressman Dick Gephardt complained about Japan’s protected economy, he was vilified as the protectionist.</p>
<p>What’s true of Japan (and to varying degrees Brazil, Korea, France, Germany, the United States, and even Britain) is true, in spades, of China. Beijing uses a system of state capitalism, also known as neo-mercantilism, that defies everything Western elites hold dear about the superiority of free markets. The Chinese government, working with friendly industrialists, provides cheap capital. It protects against imports, and subsidizes exports. Western rivals are offered partnerships with Chinese counterparts, but on coercive terms that defy normal commerce.</p>
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<p>It was no accident that the chief architect of Bretton Woods was John Maynard Keynes. Here, Keynes and the Harry Dexter White, the International Monetary Fund's first director, speak at the inaugural meeting of the IMF's Board of Governors in 1946.</p>
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<p>Western companies get subsidized factories and cheap, competent, repressed Chinese labor. But the Western partner is often prohibited from selling in the domestic Chinese market, and is restricted to producing for export. China openly coerces or covertly steals sensitive trade secrets from its partners.</p>
<p>With this system, China has gained commercial leadership in industry after industry, often using subsidies to underprice Western rivals and put them out of business. Just to be sure of its export success, China for prolonged periods intervened in money markets to keep its currency undervalued.</p>
<p>As a matter of economics, such a system is not supposed to work. For one thing, it flagrantly violates market pricing mechanisms. For another, by relying on deals between a non-democratic Chinese state and Chinese entrepreneurs, the system invites corruption. But whatever its impossibility in theory, the system works in practice, well enough to have propelled China to world economic leadership.</p>
<p>Unlike the Soviets, whose system of state enterprise produced shoddy goods in short supply, or the Argentines, whose efforts at protection resulted in non-competitive products, the Chinese got mercantilism right. Indeed, in just two decades, China has become the dominant producer not just in catch-up industries but in pioneering new technologies. It will soon be the leader in electric vehicles and 5G internet, and it runs a chronic trade surplus with the rest of the world.</p>
<p>China rapidly turned its economic gains into geopolitical strength, becoming the dominant economic partner with much of the developing world. As an autocracy, it has begun flexing its economic muscles geopolitically.</p>
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<p><strong>THE RISE OF CHINA</strong> has created a crisis of ideology and policy for the American governing elite. The abject failure of America’s China policy was a blend of ideological blinders and conflicts of interest. Political leaders, seconded by orthodox economists, convinced themselves that by allowing China into the global system via the WTO, they would move China in the direction of liberal free-market democracy. Key people on Wall Street, notably inhabitants of the revolving door such as Robert Rubin, may have had ideological qualms or geopolitical anxieties about the rise of still-communist China. But their firms were making a fortune brokering the deals. In the academy, to be an apologist for Beijing was to get nice lecture fees and generous support for research centers.</p>
<p>The claims of leading figures of that era are embarrassments. George W. Bush could insist: “Economic freedom creates habits of liberty. And habits of liberty create expectations of democracy. … Trade freely with China, and time is on our side.” Tom Friedman flatly predicted, in his book <em>The Lexus and the Olive Tree</em>: “China’s going to have a free press. Globalization will drive it.”</p>
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<p>The rise of China has created a crisis of ideology and policy for the American governing elite. Here, Chinese President Xi Jinping raises a glass for a toast during a state dinner with President Donald Trump at the Great Hall of the People in Beijing.</p>
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<p>None of these worthies seemed to notice that China’s state-led, semi-market economy was practicing something other than free trade. But it was convenient to believe that it was, and that challenges to China’s protection were somehow themselves protectionist.</p>
<p>In the March/April issue of <em>Foreign Affairs</em>, flagship of the foreign policy establishment, two notables very belatedly admit that people such as themselves got China totally wrong. Kurt Campbell, former assistant secretary of state for East Asian and Pacific affairs and Ely Ratner, a senior China expert, both serving under Barack Obama, write:</p>
<p style="margin-left:.5in;">Diplomatic and commercial engagement have not brought political and economic openness. Neither U.S. military power nor regional balancing has stopped Beijing from seeking to displace core components of the U.S.-led system. And the liberal international order has failed to lure or bind China as powerfully as expected.</p>
<p>Better late than never, I suppose, but massive damage has already been done. And if illusions about China are belatedly being shed, illusions about “free trade” are not.</p>
<p>Those knowledgeable about China who took a dissenting view were a tiny group. Writing in the <em>Prospect</em> in 2007, James Mann, former Beijing correspondent for the <em>Los Angeles Times</em>, warned:</p>
<p style="margin-left:.5in;">The fundamental problem with this strategy of integration is that it raises the obvious question: Who's integrating whom? Is the United States now integrating China into a new international economic order based upon free-market principles? Or is China now integrating the United States into a new international political order where democracy is no longer favored, and where a government's continuing eradication of all organized political opposition is accepted or ignored?</p>
<p>But people who held such views were simply not admitted to the foreign policy establishment. The U.S.-China Economic and Security Review Commission, a body created by an act of Congress in 2000, has assembled encyclopedic evidence on the details of China’s state capitalism and the consequences for U.S. industry. Its work has been widely ignored.</p>
<p>The failure to address China’s mercantilism was only part of the myopia surrounding the brand of globalism constructed by and for economic elites. There was a fundamental disconnect between the knee-jerk support for deregulated international commerce and the acceptance by even mainstream economists that markets are far from perfectly efficient. Labor markets need to be regulated to prevent exploitation of workers; capital markets need to be regulated to prevent financial fraud and periodic depressions; the environment needs to be regulated to prevent industry from treating it as a free sink; and government needs public investment to bridge over shortfalls of demand and to develop regional economies. So if markets are far from perfect at home, why do they suddenly snap back to perfect efficiency just because commerce crosses borders? Obviously, they don’t.</p>
<p>Elites of both parties won the policy debates on trade, but lost the people. By 2016, millions of working people whose families had once reliably supported Democrats had defected to the Tea Party and then to Trump. Across the Atlantic, their counterparts were deserting social democrats to support far-right nationalist parties. Conflicts over refugees and over identity compounded the backlash, but it was basically economic.</p>
<p>There was—and is—a different way of conducting trade. The original International Trade Organization proposed at Bretton Woods called for a regime that would promote commerce but also defend enforceable labor standards. A treaty creating the ITO was negotiated in 1947, but never ratified. We need to revisit that approach. A tax on financial transactions would slow down the global speculative financial casino. A much tougher stance on China would make it clear that if China does not play by market rules, it cannot expect free-market entry of its products. A different set of trade norms would leave plenty of room for national industrial policies. The overall goal should be to reclaim space for nations to protect social standards and restore a balanced social contract.</p>
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<p>President Donald Trump meets with members of Congress to discuss trade issues in the Cabinet Room of the White House</p>
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<p>This is economic nationalism of a kind, but the sort of benign nationalism that prevailed during the postwar boom, and a form of legitimate patriotism reminiscent of the solidarity of World War II. It has little in common with Trump’s version of nationalism. Many Democrats in Congress have tried to pursue this approach, but they get shouted down by the presidential wing of the party and ridiculed by the press.</p>
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<p><strong>THE BIPARTISAN EMBRACE</strong> of elite globalism, rejected on a gut level by tens of millions of citizens and contradicted by economic history, created a vacuum that was exploited by Donald Trump. The trouble is that Trump may be good at channeling the discontent, but he is a failure and a faker at providing real remedies.</p>
<p>The recent dust-up over tariffs on steel and aluminum perfectly illustrates what Trump gets right and what he gets wrong, and how the trade establishment misses the point. When Trump ordered the tariffs, the response was an almost universal chorus of jeers. The man, obviously, was ignorant of basic economics. The protection of a relatively small number of domestic jobs producing steel and aluminum would be dwarfed by the loss of far more jobs in industries that make products that use steel and aluminum—everything from cars to beer cans. Trump was setting off a trade war. Trump, impulsively, had announced these tariffs to the surprise of his closest advisers.</p>
<p>Most of this story was wrong. In fact, a voluminous technical report in January documented the worldwide glut in steel and aluminum, the existential threat to these two key domestic industries, and identified China as the prime culprit for its massive state-subsidized overproduction. U.S. steelmakers produce about 75 million metric tons a year. China’s overcapacity, which has grown from virtually nothing in two decades, is more than 300 million tons.</p>
<p>Nor did Trump order these tariffs impulsively or abruptly. His commerce secretary, Wilbur Ross, presented him with a decision memo offering several options, including more narrowly targeted actions. Trump, being Trump, simply went with the dumbest alternative—tariffs against everyone.</p>
<p>The likelihood of a “trade war,” the subject of much press hysteria, is also vanishingly improbable. By the second week in March, Robert Lighthizer, Trump’s top trade official, was already in Brussels, meeting with his European and Japanese counterparts. Lighthizer is a serious, well-informed trade expert. He served as one of Ronald Reagan’s top trade officials, in the last administration that appreciated the mercantilism of other nations as a potential national security threat. Lighthizer then went on to be a respected trade lawyer in private practice, representing victims of other nations’ mercantilism.</p>
<p>The recent history of tariffs is not trade wars but bargaining chips. We can expect that negotiations in coming weeks will walk back the risk of a general tariff war, and if Trump listens to his trade advisers, the target of tariffs and other retaliatory threats will shift to China. What’s needed is a general strategy in which the West will not tolerate China’s state capitalism as a tactic to dominate world production of key industries, even less so when economic mercantilism is weaponized as part of a geopolitical grand design.</p>
<p>In his initial tariff orders, Trump’s own ineptitude cut China far too much slack. But even Trump may stumble his way toward noticing the real problem. In March, the little-known Committee on Foreign Investment in the United States (CFIUS) issued a report recommending that the government block, on national security grounds, a proposed hostile takeover of chip-maker Qualcomm by Broadcom, a Singapore-based company close to the government of China. Trump duly vetoed the takeover.</p>
<p>Trump’s version of economic nationalism is a blend of mistaken tactics, oversimplified nostrums, and remedies that will not rebuild American industry. Occasionally, as in the CFIUS order, Trump gets something right. Even his tariffs, though misdirected, blew open the door to what should be a much broader reappraisal of American geo-economic theories, goals, and policies. If the mainstream does not take this challenge seriously, and especially if Democrats fail to define a constructive form of economic nationalism in service of reclaiming managed capitalism, we will be left with Trump’s version—one that is uglier, more demagogic and less effective—but the only one on offer to a frustrated populace.</p>
</div></div></div>Mon, 19 Mar 2018 09:00:00 +0000229774 at http://prospect.orgRobert KuttnerDonald Trump's Good Weekhttp://prospect.org/article/donald-trumps-good-week
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<p>President Donald Trump in the East Room of the White House</p>
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<p><span class="dropcap">I</span>s Donald Trump some kind of feral genius whose intuition takes him into policy realms where lesser leaders fear to tread? He takes willful pleasure in not reading briefing books or checking with experts, but in trusting his ample gut.</p>
<p>Exhibits A and B, which dominated the news last week, were his ordering of tariffs on aluminum and steel, to the horror of every orthodox trade expert (and the joy of his base); and his even more abrupt decision to accept the invitation of North Korean leader Kim Jong-Un for a face to face meeting.</p>
<p>Might either of these impulsive decisions produce policy breakthroughs, proving the conventional view of both substance and process wrong? Take the case of Korea first.</p>
<p>Ever since the Clinton administration, the North Koreans have tried to pull the United States into a process that would result in security guarantees for themselves and lifting of sanctions, in exchange for some kind of limits on their nuclear program. But those limits never quite materialize.</p>
<p>After more than three decades of false starts under three generations of Kims, starting with the current leader’s grandfather Kim Il-Sung in 1994, North Korea’s program of intercontinental missiles and nuclear weapons has only moved relentlessly forward. Given the logic of Mutually Assured Destruction, Washington has lost leverage over Pyongyang with every passing year.</p>
<p>The diplomacy is even more complicated now, because a left-of-center president governs in South Korea. To the consternation of the U.S., which has wanted to keep North Korea isolated, South Korean President Moon Jae-in has made multiple overtures to the North to move towards more normal relations. It was a South Korean emissary who passed to Trump Kim’s invitation to meet, which Trump impulsively accepted. Kim has already agreed to temporarily suspend nuclear and missile testing as a gesture to the South.</p>
<p>What sort of agreement could conceivably result? Ironically, a rough model is the deal with Iran, a bargain negotiated by Barack Obama and one that Trump scorns and regularly threatens to up-end. But Iran’s nuclear program is far less developed than Korea’s and Iran doesn’t have intercontinental missiles.</p>
<p>What might a grand bargain look like? North Korea would have to promise to freeze or roll back its nuclear program. In exchange, the U.S. would lift sanctions and maybe even pull out some troops. Kim has called for a nuclear-free Korea. There would be more normalization of relations between South and North, and the whole deal would be guaranteed by the great powers, including China.</p>
<p>To say that this is improbable is an understatement. Even assuming the most competent and nuanced of diplomacy—and remember we are talking about Donald Trump—Kim is not about to give up his nuclear program nor is he likely to subject it to verifiable international inspection, an offer that has been regularly made, and then slow-walked, and then withdrawn.</p>
<p>The best we might hope for would be a series of “trust-building” baby-steps: a moratorium on the name-calling; a suspension of tests; and more moves towards rapprochement between South and North, with Washington’s blessing. This might give both Trump and Kim some favorable publicity, but if it did nothing to slow the development of stronger bombs and longer-range missiles, the advantage would be Kim’s.</p>
<p>The meeting may never happen, as these risks are explained to Trump. If the meeting does happen, it could degenerate into insults. The worst case—that Kim’s charm offensive tricks Trump into a deal that advantages North Korea—is probably unlikely. Trump loves the bold stroke, but even Trump doesn’t want to look like a fool.</p>
<p>The tariffs on steel and aluminum are another story. To hear the mainstream press tell it, this was another abrupt, impulsive decision that surprised Trump’s advisers, that risks setting off a trade war, and that will cost America dearly as products that use aluminum and steel become more expensive—destroying more jobs than the tariffs save.</p>
<p>Most of this is wrong, though Trump did make a major mistake in not targeting the retaliation against China. The fact is, both of these domestic industries are in dire straits and most of the global glut is the result of China’s state-subsidized production.</p>
<p>Trump did mention China’s role in passing when he ordered the tariffs imposed, but weirdly he imposed them on the entire world, exempting NAFTA partners Canada and Mexico only as an afterthought at the last minute. Even more perverse was Trump’s decision to apply the tariffs to the European Union, whose help we will need in a common front against China’s predatory state-led capitalism.</p>
<p>But this was no impulsive gesture. It is the consequence of an extensive investigation by the Commerce Department, released in January, documenting the problem of Chinese subsidized overproduction, and the disastrous impact on two core U.S. industries.</p>
<p>After the report was released, Trump’s trade officials gave him several policy options. He picked the most dramatic and most self-defeating one.</p>
<p><span class="pullquote-right">What now? The odds of a trade war are vanishingly small.</span> The entire history of tariffs is that they are in place for a while and then are modified or withdrawn when serious retaliation is threatened.</p>
<p>If Trump bothers to listen to his trade advisers, who are among the more serious and well informed of his inner staff, he will eventually modify these tariffs so that they are part of a coordinated strategy with the EU to confront China’s mercantilism.</p>
<p>Over the weekend, chief trade negotiator Robert Lighthizer, the smartest of Trump’s trade advisers, met in Brussels to talk with his counterparts from the EU and Japan about getting back on the same side. If Trump is shrewd and can pay attention long enough, China needs to be the focus of the newly aggressive trade policy, since China is the root of the problem.</p>
<p>In the past couple of weeks, China has waived term limits for its current autocratic leader, Xi Jinping. The Chinese were pleased that the tariffs did not target them, and looked on benignly as Trump embarked on what is likely to be a fool’s errand to meet with their ally, Kim Jong-Un.</p>
<p>Trump was in high spirits as he campaigned in Pennsylvania for the Republican candidate in Tuesday’s special election for a House seat in a steel-producing district. You might say Trump had a pretty good week. Chinese President Xi Jinping had a better one.</p>
<p><em>An <a href="http://www.huffingtonpost.com/entry/opinion-kuttner-trump-korea_us_5aa66e65e4b086698a9f96b7">earlier version</a> of this article appeared at</em> The Huffington Post. <em><a href="http://www.prospect.org/subscribe">Subscribe here</a>. </em></p>
</div></div></div>Mon, 12 Mar 2018 21:13:51 +0000229748 at http://prospect.orgRobert KuttnerTrump: The Bull in the China (Policy) Shophttp://prospect.org/article/trump-bull-china-policy-shop
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<p>President Donald Trump speaks at the 2018 Conservative Political Action Conference</p>
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<p><span class="dropcap">T</span>rump is right to attack the foreign subsidy of steel and aluminum exports that threaten to wipe out what’s left of domestic industry. And he’s right to resort to tariffs. But by levying tariffs against the entire world, Trump fails to target the prime offender: China.</p>
<p>But Trump’s action has blown open the door to a conversation that America needs to have. The knee-jerk reaction to Trump’s orders shows how orthodox economists and the mainstream press refuse to grasp what’s at stake. Instead, we got the usual sermon about the folly of protectionism and the risks of a general trade war.</p>
<p>If you want to appreciate true protectionism, take a good look at China’s entire economic system. Steelworkers’ union president Leo Gerard <a href="https://www.nytimes.com/2018/03/03/business/economy/tariff-blue-collar.html">put it perfectly</a>: “Some of these idiots that say we are going to start a trade war—well, we are in a trade war now, and we are just sitting back.”</p>
<p>What’s the nature of this trade war? Beijing subsidizes production, floods the world with a glut of products at prices below their true costs, blocks imports, demands trade deals with western “partners” on terms that transfer technology and leadership to China, uses state intelligence agencies to steal intellectual property whose transfer it can’t coerce—and then demands and gets special treatment under the WTO as a developing country! All of this grossly violates free-market norms, and grabs market share in industry after industry at the expense of nations like the U.S. that mostly play by the rules.</p>
<p>And as Josh Bivens of the Economic Policy Institute has <a href="https://www.nytimes.com/2018/03/05/opinion/trump-tariffs-trade-recession.html">astutely reminded us</a>, it’s not as if the U.S. doesn’t selectively protect. Successive administrations have spent great diplomatic and political capital to give exaggerated protections to politically influential industries like Big Pharma, software, and entertainment—just not to the crown jewels of unionized American manufacturing.</p>
<p>China produces over 800 million metric tons of steel, close to half of all the steel produced in the world, and its steel capacity keeps increasing. By comparison, the U.S., once the world’s leader, produces just over 70 million metric tons. Industry experts calculate that more than half of China’s steel output, about 425 million metric tons, is excess capacity.</p>
<p>The mainstream critics who attacked Trump’s action make arguments that miss the deeper point. For starters, they note that China only provides about 3 percent of steel imports into the U.S., so why go after China?</p>
<p>But look a little deeper. In response to past complaints that resulted in tariffs against particular categories of dumped Chinese steel, China simply increased its exports of steel to other nations, such as South Korea, for re-export. The Koreans then fabricated the steel into products like pipeline sections, which they exported to the U.S.</p>
<p>Thus Chinese steel evaded existing U.S. measures by detouring through other countries. But the core of the problem remains China’s predatory excess output.</p>
<p>Other trade complaints have been filed under relatively cumbersome anti-dumping procedures that require extensive documentation by complaining parties. This one was different, in that Trump invoked a seldom-used national security rationale, under Section 232 of the 1962 Trade Expansion Act. In this case, the government wrote its own extensive report and found—correctly—that American-made steel and aluminum faced an existential crisis and that losing those industries would have dire consequences for national defense.</p>
<p>Trump’s timing may be suspicious, with a <a href="https://www.cnn.com/2018/03/02/politics/rick-saccone-pennsylvania-trump-trade-tariffs/index.html">special election</a> for a vacant House seat coming up in Pennsylvania’s steel country on March 13. Even so, Trump did not just pull these tariffs out of his ear.</p>
<p>The <a href="https://www.commerce.gov/sites/commerce.gov/files/the_effect_of_imports_of_steel_on_the_national_security_-_with_redactions_-_20180111.pdf">voluminous technical report</a> by the Commerce Department, made public January 11, found that relentless increases in import penetration had reduced U.S. steel production to below 70 percent of capacity, portending “a non-financially viable and unsustainable level of operation.”</p>
<p>The Commerce Department report <a href="http://www.aluminum.org/getting-trade-right">also found</a>, in the case of aluminum, that,</p>
<p style="margin-left:.5in;">[T]here is only one remaining U.S. producer of the high-quality aluminum alloy needed for military aerospace,” and that China was a prime source of subsidized global oversupply. In 2000, China produced 11 percent of the world’s aluminum. Today it produces more than half. And, using coal-based smelters, it has the world’s dirtiest production of aluminum in terms of carbon emissions.</p>
<p>In a public statement February 16, Commerce Secretary Wilbur Ross proposed several possible options. One was an across-the-board increase in steel and aluminum tariffs. The second was a targeted tariff increase complemented by targeted quotas aimed at nations that were the source of the problem, most notably China. The third was a quota system generally.</p>
<p>In the case of aluminum, Ross <a href="https://www.commerce.gov/news/press-releases/2018/02/secretary-ross-releases-steel-and-aluminum-232-reports-coordination">gave Trump a choice</a> of several tariff and quota measures that would “raise [domestic] production of aluminum from the present 48 percent average capacity to 80 percent, a level that would provide the industry with long-term viability.”</p>
<p>Trump, being Trump, went for the most simplistic, sensationalist and headline-grabbing move—tariffs on <em>all</em> steel and aluminum imports. This was hardly a surprise. Back in August, <em>Axios</em> <a href="https://www.axios.com/exclusive-trump-vents-in-oval-office-i-want-tariffs-bring-me-some-tariffs-1513305111-5cba21a2-6438-429a-9377-30f6c4cf2e9e.html">published a leaked summary</a> of meeting between Trump and his senior trade advisers. At that meeting, Trump declared, “I want tariffs.” Trump’s top economic adviser, Gary Cohn, late of Goldman Sachs, was plainly unhappy. Trump ended the meeting by declaring to chief Staff John Kelly: <em>“I know there are some people in the room right now that are upset. I know there are some globalists in the room right now. And they don't want them, John, they don't want the tariffs. But I'm telling you, I want tariffs.”</em></p>
<p><span class="pullquote-right">So was Trump’s move smart or dumb? Basically, it was a dumb variant of a long overdue policy.</span></p>
<p>The fact that the mainstream has been ducking the reality of China’s state capitalism and its effect on U.S. industry leaves leadership on trade to far-right ultra-nationalists like Trump and his senior economic advisor, Peter Navarro, who are inclined to use a blunderbuss approach that alienates allies as well as adversaries.</p>
<p>For decades, Republican and Democratic presidents alike have waltzed around the deeper challenge that Chinese state capitalism poses, both to the global trading system and to America’s place in it. Intermittently, the West has imposed selective anti-dumping duties (tariffs) against the Chinese, but has not challenged the predatory logic of the entire Chinese mercantilist system.</p>
<p>This stands as one of the greatest intelligence and policy failures in American history—a slow motion, economic Pearl Harbor. The threat of China’s mercantilism was hidden in plain view, but ideological blinders prevented policymakers from seeing it.</p>
<p>The current issue of <em>Foreign Affairs</em> magazine has an article by two mainstream China experts, former Assistant Secretary of State Kurt Campbell and Ely Ratner, a former national security aide to Joe Biden, <a href="https://www.foreignaffairs.com/articles/united-states/2018-02-13/china-reckoning">lamenting</a> “How Beijing Defied American Expectations” and missed the China threat. But it wasn’t “America” that missed the threat. It was the foreign policy establishment. The acknowledgement is a little late in the day.</p>
<p>In part, this reticence is due to the fact that key players in America’s economic elite have figured out ways to profit from relations with a predatory China, even though Beijing is stealing their clothes in the long run. (Like climate change, that long run has arrived abruptly.) Apple loves the fact that it can make its products in China, using a well-trained, dirt-cheap, and docile work force one cut above slave labor. Goldman Sachs makes a fortune brokering financial deals with the Chinese.</p>
<p>Usually, the influence of these players is sufficient to keep American presidents from taking too hard a line against Beijing. So China treats the occasional get-tough order as a bee-sting.</p>
<p>Under Trump, however, the internal White House politics changed. The top officials dealing with trade policy, for once, are hard-liners: Commerce Secretary Ross, a former private equity billionaire who knows the steel industry well; U.S. Trade Representative Robert Lighthizer, who has a long history as a tough negotiator; and Navarro. These three are backstopped by the remaining Bannonite on the senior White House staff, Steve Miller, who reinforces Trump’s impulse to pander to economic ultra-nationalism.</p>
<p>In the internal staff discussions on the steel issue, this group of hard-liners won and the Goldman Sachs alums, Gary Cohn and Treasury Secretary Steve Mnuchin, lost. But the sheer simple-mindedness of Trump’s move to impose flat tariffs on all steel exporters stunned even the trade hawks.</p>
<p>If the main problem is China, why retaliate against Canada, which actually buys more steel from the U.S. than it sells? Why attack the EU, whose close cooperation America needs if we are to have a general strategy of seriously challenging Chinese mercantilism?</p>
<p>The EU, in fact, has its own history of levying tariffs against Chinese exports, including a 28.5 percent tariff imposed last year against pipes and tubes exported at prices below the cost of production. But Trump, in a stroke, managed to get Canada, the EU, and China all on the same side. Pressured on all sides, Trump may yet walk back the details of his order, so that it targets the prime offender, namely China, and certainly not Canada and the EU.</p>
<p>American trade policy has long been hobbled by ideological blinders, compounded by wishful thinking about China’s evolution into a free-market democracy, and further compromised by conflicts of interest. But in the quest for a drastically different trade policy, Donald Trump is about the last leader to change course competently or constructively. His own view of China is a mass of contradictions.</p>
<p>Last week, we learned that Chinese President Xi Jinping has appointed himself leader effectively for life, turning China into even more of an autocracy. Most in the West recognized the intensified threat. Trump’s reaction was praise—and envy. Speaking at a fundraiser over the weekend at Mar-A-Lago, he said: “He's now president for life. President for life. No, he's great. And look, he was able to do that. I think it's great. Maybe we'll have to give that a shot some day.”</p>
<p>Trump sees Xi more as role model than rival. A serious trade policy would go after the root of China’ state capitalism, enlisting every possible ally rather than alienating them. It would connect trade objectives to the revival of U.S. manufacturing across the board, supercharged by an infrastructure program that favored domestic producers.</p>
<p>Raising tariffs on state-subsidized steel and aluminum is a good and necessary part of the right policy. Trump’s version, so far, has energized his critics and united America’s adversaries. It’s time for the mainstream to take back the challenge of how to deal with China. Otherwise, we leave the field to Trump.</p>
</div></div></div>Tue, 06 Mar 2018 14:39:26 +0000229701 at http://prospect.orgRobert KuttnerPutin’s Acts of War and America’s Muddled Responsehttp://prospect.org/article/putin%E2%80%99s-acts-war-and-america%E2%80%99s-muddled-response
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<p><span class="dropcap">W</span>hen Vladimir Putin decided to use front organizations to leak confidential emails from the Hillary Clinton campaign and deploy bots and troll farms to rev up domestic hate groups and divide progressive ones, this was nothing less than an act of war. More than a year later, U.S. intelligence agencies have warned that more is coming in 2018 and 2020. But America’s response still leaves much to be desired.</p>
<p>For starters, we are getting no leadership from the top. Actions that a normal American president would consider an extreme national security provocation, Donald Trump welcomes as politically convenient. The Kremlin’s hacking is aimed not just at undermining democracy; it’s aimed at undermining Democrats.</p>
<p>Trump, no slouch at undermining both, has a foreign enabler. He still has not acknowledged the Kremlin’s role, much less warned Putin of consequences.</p>
<p>So while his generals, his intelligence chiefs, the Department of Homeland Security, and most Republicans in Congress take this threat very seriously, Trump is still delighted to surf it. While Robert Mueller is still sorting out what occurred in 2016, Trump’s tacit acceptance of <em>ongoing</em> Russian threats is every bit as much of a potentially impeachable offense as his initial wink-and-nod understanding with Putin.</p>
<p>Last week, officials of the Department of Homeland Security confirmed to the annual conference of top state election officials that Russian operatives has penetrated at least 21 state election systems. As far as DHS could tell, there was no disruption of voter rolls (yet), but, as they put it, the Russians were “knocking on the windows,” and in a couple of cases had gotten inside the house.</p>
<p>In effect, there are three overlapping but distinct kinds of threats. Besides penetrating election systems, the Russians have demonstrated that they can selectively hack and leak emails. They also created fake forms of activism, and in 2016 Russian fake sites tricked Americans into reading or forwarding no fewer than 126 million political messages.</p>
<p>There are those who argue that Russian meddling in America democracy is just not that big a deal, and in any case is not likely to have tipped the election. These include the <a href="https://www.theguardian.com/commentisfree/2018/feb/23/russian-bots-us-election-coup-d-etat">Russian émigré writer</a> <a href="https://www.newyorker.com/news/our-columnists/the-fundamental-uncertainty-of-muellers-russia-indictments%20%20author%20Thomas%20Frank,">Masha Gessen</a>, and <a href="http://www.washingtonpost.com/news/monkey-cage/wp/2018/02/16/the-surprise-mueller-indictment-tells-us-how-weve-been-wrong-about-russian-trolls/?utm_term=.0d46295a1d3c">political scientist Henry Farrell</a>.</p>
<p>Their argument is, first, that Putin doesn’t have as much control as many in the West think, and that the hacking and trolling operations were the work of a loose network of Russians, not the Kremlin. This conclusion seems to me dangerously naïve. In a state as authoritarian as Putin’s Russia, it is inconceivable that something as sensitive as a counter-intelligence operation aimed at destabilizing American democracy could have gone on without Putin pulling the strings. Putin of course is himself a former KGB agent.</p>
<p>Some also contend that even if the Kremlin did engage in this meddling, it’s unlikely that it tipped the election. That also seems naïve.</p>
<p>The Kremlin-directed hacking of the Clinton campaign’s emails created great turmoil in the campaign, and set off a sequence of events leading to then–FBI Director James Comey’s damaging statement that Clinton, though not guilty of a crime, had used poor judgment. All of this served to put Clinton the defensive at a time when Trump should have been on the defensive.</p>
<p>The fake social media campaign was also damaging to Clinton. One of the Russian tactics was to depress black turnout, with the pitch that Trump and Clinton were equally bad and that black voters should stay home. And black turnout indeed fell.</p>
<p><span class="pullquote-right">It’s impossible to know exactly how much damage these efforts did. But it only needed to flip fewer than 100,000 votes to have flipped the election.</span></p>
<p>Even among those who do recognize the seriousness of this assault on democracy, there are divisions on how best to proceed. Late in the Obama administration, when Obama felt constrained not to appear to be tilting toward Hillary Clinton, the administration introduced some half-hearted travel and financial sanctions against individual senior Russian officials. Putin laughed these off as a cost of doing business.</p>
<p>But if a future American president wanted to seriously raise the cost to Putin in order to deter future election hacking, the options seem limited. Escalating within the realm of cyber-warfare isn’t plausible. Both superpowers have the ability to disrupt each other’s large complex systems that depend on the internet, but that would lead to a kind of mutually assured destruction.</p>
<p>More promising might be the idea of denying Russia access to the West’s banking or air transport system. Ever since the Patriot Act increased compulsory financial reporting to detect terrorist money laundering, the government has had the capacity to shut down financial transactions with blacklisted organizations or even counties.</p>
<p>A problem, however, is that some of our closest allies, such as Germany, have a web of business, energy, and banking deals with the Russians. Chancellor Angela Merkel may be a hard-liner on warning Putin against Russian hacking of European elections, but German business is not about to jeopardize these deals.</p>
<p>So we are left with playing defense. The good news is that even Republican state election officials now recognize the threat.</p>
<p>Last November, the outgoing Democratic Secretary of Homeland, Jeh Johnson, defined election systems as part of critical national infrastructure. There was much complaining from Republican state election officials, led by Kansas’s notorious secretary of state Kris Kobach, who did not want DHS any more than they wanted the Justice Department to be looking over their shoulders.</p>
<p>But then, two heartening things happened. Trump’s DHS did not repeal Johnson’s order; and nearly all Republican state election officials came around. In a sense, despite Trump, part of the “deep state” excoriated by Steve Bannon has been doing its job.</p>
<p>It remains to be seen, in this game of Spy versus Spy, how well 50 states will be able hold off the anticipated Russian cyber-invasion, and how Russian meddling will interact with homegrown voter suppression, ballot purges and other Republican mischief.</p>
<p>The other set of players in this drama, Facebook and other social media platform companies, <a href="https://www.washingtonpost.com/news/the-switch/wp/2017/10/31/facebook-google-and-twitter-are-set-to-testify-on-capitol-hill-heres-what-to-expect/?utm_term=.220bf8bf6c2c">have been enablers</a> of a lot of Russian hacking. For the most part, they’ve displayed a studied indifference to the need to be part of the defense. </p>
<p>The defense Facebook is most forcefully pursuing is its own business model. Their concern is that if they aggressively intervene to identify and block Russian bots and trolls, they might open themselves to (long overdue) regulation of their other abusive, though lucrative, practices. Obviously, if the smartest AI people in the world, in Facebook’s employ, can figure out micro-targeting of your shopping and personal network habits, they can figure out who is a troll farm. More on that in next week’s column.</p>
<p>The Russian manipulation of these platforms only strengthens the case for regulating them. Trump, however, is generally opposed to regulating business, and the fact that Facebook in effect enables Putin is one more reason to leave it alone.</p>
<p>The United States, with its array of public- and private-sector players, a maze of divided state and federal agencies, and a president who is dysfunctional at best and treasonous at worse, is something of a sitting duck. We spend about ten times what the Russians do on conventional military weapons. But Putin has devised a diabolical form of dirt-cheap cyber guerilla warfare that turns America’s strengths into vulnerabilities.</p>
<p>If Mueller’s investigation doesn’t lead to Trump’s ouster first, this president’s passivity bordering on acquiescence in the face of these acts of war by a foreign power needs to be a prime issue in coming elections. Let’s hope that Trump’s hold on the deep state is sufficiently tenuous and intermittent that our Homeland Security professionals can do their jobs of safeguarding American elections.</p>
<p> </p>
<p>The deeper challenge is the interaction with Russian threats and social media companies’ indifference with pre-existing assaults on American democracy, most of them led by pre-Trump Republicans and corporate plutocrats. Even as we protect against foreign mischief, we need to redouble our vigilance against purely domestic enemies of democracy.</p>
<p><em>An <a href="http://www.huffingtonpost.com/entry/opinion-kuttner-russia-hacking_us_5a940f23e4b01e9e56bdae20">earlier version </a>of this article appeared at</em> HuffPost. <em><a href="http://www.prospect.org/subscribe">Subscribe here</a>.</em></p>
</div></div></div>Tue, 27 Feb 2018 16:46:19 +0000229660 at http://prospect.orgRobert KuttnerMueller Corners Trumphttp://prospect.org/article/mueller-corners-trump
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<p><span class="dropcap">S</span>pecial Counsel Robert Mueller is methodically, brilliantly filling in pieces of a jigsaw puzzle. When complete, the puzzle will depict a president who is ripe—overripe—for impeachment.</p>
<p>Mueller’s indictment on Friday of Russia’s cyber-warfare against the 2016 election was a tactical and investigative masterstroke. President Donald Trump is now cornered. Mueller’s report makes a total liar out of Trump for his <a href="https://www.washingtonpost.com/news/politics/wp/2017/12/14/what-trump-was-saying-about-russia-and-putin-and-what-the-campaign-was-doing/?utm_term=.f72548b6784f">repeated </a><a href="https://www.washingtonpost.com/news/politics/wp/2017/12/14/what-trump-was-saying-about-russia-and-putin-and-what-the-campaign-was-doing/?utm_term=.f72548b6784f">claims</a> that he believes Russian President Vladimir Putin when Putin says Russia had nothing to do with it, that the hacking could have been “some guy in New Jersey.”</p>
<p>The indictments do not quite connect the Russian operation to Putin personally, no serious person believes that an operation as sensitive as deliberate disruption of a U.S. election could go forward without Putin’s full knowledge and support in a state as authoritarian as his.</p>
<p>Trump, having repeatedly denied Russian involvement, has now shifted gears and is insisting that the proper test of wrongdoing is “collusion.” But this is a straw man.</p>
<p>During the campaign, Trump repeatedly and publicly urged the Russians to come forward with dirt on Hillary Clinton. His top advisers met with Russian operatives to see what they had. That part of Mueller’s investigation is still open.</p>
<p>What we already know is plenty damning. A conspiracy of interest does not have to include an explicit tit-for-tat deal. It can be based on signaling.</p>
<p>In this case, Trump and his family relied on <a href="https://www.washingtonpost.com/opinions/a-history-of-donald-trumps-business-dealings-in-russia/2017/11/02/fb8eed22-ba9e-11e7-be94-fabb0f1e9ffb_story.html?utm_term=.98b97b9f3bc0">massive bailouts</a> of his failing business enterprises from Russian oligarchs close to the Kremlin. When he became a presidential candidate, the Russians treated him as an asset—a useful idiot, as Stalinists used to put it. And when the campaign finalists turned out to be Trump versus the hard-line Clinton, the Russians sought to destroy her and elect Trump.</p>
<p>Trump, meanwhile, became the most pro-Russia president in U.S. history, refusing to breathe a word of criticism of Putin, behaving like the head of a client state. This much of the story is hidden in plain view.</p>
<p>The details—Russian financing of Trump’s businesses, more campaign contacts—will be spelled out in further indictments. They will almost surely include members of Trump’s family. Mueller’s final report will look very much like a bill of impeachment.</p>
<p>What’s astonishing is that this detailed report on Russian manipulation of a U.S. presidential election had to come from a special counsel. Under a normal administration, evidence of a foreign power meddling in a U.S. election would have prompted a presidential order for a full investigation, and retaliation. Instead, Trump mocked the whole idea and used his influence to block such inquiries by House and Senate panels, as well as resisting retaliation.</p>
<p>Rather than looking deeply into Russian interference, the president redefined election integrity. He created a commission headed by Vice President Mike Pence and Kris Kobach, the Kansas secretary of state best known for voter suppression, to investigate alleged voter fraud by immigrants and others not qualified to vote had helped Clinton win the national popular vote. This red herring was so preposterous that the commission collapsed of its own weight.</p>
<p>Bottom of FormSo where does Mueller’s latest set of indictments leave us? First, these disclosures end Trump’s intermittent efforts to fire Mueller. If he were to try that now, it would be an open-and-shut case of obstruction of justice. Congressional Republicans would have no choice but to begin the impeachment process.</p>
<p>Second, they drive a further wedge between Trump and the Republican leadership in the House and Senate. All key Republicans, whatever their marriage of convenience with Trump on other issues, have expressed outrage at the Russian operations and praised Mueller. Trump, by contrast, has only proclaimed his own lack of complicity, and has said nothing about what documented Russian interference means for American democracy, much less vowed to resist it and punish Putin.</p>
<p>We also see a further wedge between Trump and the entire intelligence community. Last week, on the eve of the Mueller indictments, the leaders of every major intelligence agency, including Trump appointees, <a href="https://www.theatlantic.com/politics/archive/2018/02/the-intelligence-community-warns-congress-russia-will-interfere-in-2018-elections/553256/">testified unanimously before Congress</a> that there was no doubt that Russia meddled in the 2016 election. Unlike Trump, they are alarmed that Putin tipped a U.S. election to a pro-Kremlin stooge.</p>
<p>One question is the degree to which Mueller’s 37-page indictment relied on materials from those U.S. intelligence agencies, and what else the government has that it isn’t revealing out of concern for disclosing “sources and methods.” <span class="pullquote-right">Mueller’s indictment goes into far more detail than anything else that has been made public.</span></p>
<p>Two other questions remain. First is Mueller’s timing. When will other indictments come? He could wrap things up in a matter of weeks, or the investigation could drag out beyond November’s midterm elections.</p>
<p>Second is how the U.S. should punish and deter Russia. The Russian actions to undermine American democracy and tip the election amounted to an act of war. And if those actions were as effective as much reporting and now Mueller’s indictments have suggested they were, it means Trump literally became president in a Russia-sponsored coup d’état.</p>
<p>This is a huge challenge, on which the U.S. has made little headway, though the Obama administration at least made some serious efforts. The U.S. and the Russians have the capacity to knock out each other’s vital defense and infrastructure systems that rely on the internet. But unlike the nuclear deterrence of Mutually Assured Destruction, there are no bright lines when it comes to self-restraint in cyber-war. If there were, Russia surely crossed one in 2015 and 2016.</p>
<p>This makes the challenge of deterrence and proportional punishment a nightmare. The U.S. does not have in place a serious program to help states resist cyber-hacking of voting systems. Even harder is an effort to block the kind of social media covert warfare that Mueller’s Friday indictments began to expose.</p>
<p>Only punishment might work, but what sort of punishment? What does it mean to fire a cyber-shot across the Kremlin’s bow? And how to prevent a deadly game of mutual escalation? The NSA, the Pentagon, the CIA and others in the government have thousands of people working on this, and from what I’ve read nobody has good answers. The fact that the current president of the US has expressed studied interest and obstruction makes the challenge that much harder—and all by itself is grounds for impeachment.</p>
<p>Mutually assured cyber-destruction would be a catastrophe; that’s why Russia gets away with these incursions. But slaps on the wrist like banning the travel or freezing the bank accounts of a few Russian individuals just makes America look pitiful.</p>
<p>This is the serious question America needs to take up, once Trump is gone. Thanks to Mueller’s latest revelations and those still to come, that day may not be far off.</p>
<p><em>An <a href="https://www.huffingtonpost.com/entry/opinion-kuttner-mueller-russia_us_5a8a3dfde4b004fc31939016">earlier version</a> of this story appeared at</em> The Huffington Post. <em><a href="http://www.prospect.org/subscribe">Subscribe here</a>.</em></p>
</div></div></div>Tue, 20 Feb 2018 15:27:03 +0000229587 at http://prospect.orgRobert KuttnerThe Deficit Hawks Have It Wronghttp://prospect.org/article/deficit-hawks-have-it-wrong
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<p><span class="dropcap">Q</span>uestion for today: What is the connection between the Republican tax cuts, the rising federal deficit, and the wildly gyrating stock market? The answer is trickier than it seems.</p>
<p>Ever since Ronald Reagan, Republicans have relentlessly played the following cynical game. It has three basic moves.</p>
<p>One: Cut taxes on the wealthy. Insist that the cuts will not increase the deficit because of the tonic, “supply-side” effect on economic growth.</p>
<p>Two: When deficits increase, express shock; discover the menace of the national debt—and cut social spending.</p>
<p>Three: Rinse and repeat.</p>
<p>This fiscal spin cycle has been performed under Reagan, Bush I, Bush II (twice), and now Trump. The spending cuts typically occur under Democrats, who play the role of Fiscally Responsible Adults in this drama, thus putting Democrats at odds with their own ideology and constituency for public services, not to mention sensible economics.</p>
<p>After Republicans thrice looted the Treasury for the rich, deep cuts were ordered under Bill Clinton, and later under Barack Obama. Even worse, Clinton and Obama internalized the fiscal Kool-Aid and became true believers in the virtue of fiscal austerity.</p>
<p>Clinton even crowed that his policies put the federal budget into permanent surplus. Bush II quickly put an end to that surplus with two rounds of tax cuts, coupled with social spending cuts.</p>
<p>Obama temporarily increased spending to deal with a deep recession brought on by the economic collapse caused by financial deregulation. But Obama, as Fiscal Adult, felt so guilty about the deficits (caused mainly by the collapse, not by his modest stimulus spending) that he embraced a program of spending cuts even before Republicans took over Congress.</p>
<p>Now under Trump, we are back to phase one of the soaking. Taxes have been cut by $1.5 trillion over a decade. The deficit, which came down sharply under Obama, is headed skywards again.</p>
<p>The annual budget deficit, which steadily declined under Obama, thanks mainly to the economic recovery, from 10 percent to well under 3 percent of GDP, is projected to increase to 5 or 6 percent. And as another sign that they truly don’t care about deficits (during tax cutting season, anyway) Republicans, to close a two-year budget deal with Democrats, offered a rare agreement to increase some social spending along with military spending.</p>
<p>But this modest increase is hugely misleading, since discretionary social spending after several prior rounds of cuts is at its lowest level in several decades, well below the level of 2010 even with these restorations. And sure as night follows day, if Republicans keep control of Congress more cuts in social spending will come next year.</p>
<p>Should citizens be alarmed about the rising national debt? This brings us back to the tricky question that I posed at the outset—the connection between the tax cut, the projected deficit and the stock market wobble.</p>
<p>Basically, the stock market tanked because everyone knew it was overvalued and a correction was coming soon. Markets can’t keep going up at 20 percent per year when GDP only goes up 3 percent. The question was when the break would come.</p>
<p>The immediate trigger was a January report by the Labor Department that wages were at last rising because of low unemployment rates. Rising wages can be inflationary if corporations succeed in passing the costs along to the public in the form of higher prices, rather than taking them out of profits. But that may or may not occur.</p>
<p>Historically, central bankers have tried to preempt this inflation possibility by hiking interest rates, often long before it’s really needed.</p>
<p>It was this expectation of higher interest rates in the wake of that Labor Department report that triggered the first day of triple-digit decline in the Dow. Concern that the tax cut and the budget deal would further increase the deficit, leading to even more upward pressure on interest rates, poured oil on the flames.</p>
<p>But here’s where the story gets tricky. As central bank behavior during the long recovery shows, as long as underlying inflation pressures remain low, there is no need for deficits to raise interest rates—unless central banks revert to their usual folly.</p>
<p>Despite the belated increase in long-depressed wages, there is little general inflation on the horizon. And, if corporate America is to be believed, many companies are financing those (modest) wage increases out of their tax cuts, not out of price hikes.</p>
<p>So although it would be politically convenient for Democrats to blame the falling stock market on Trump, it would be an exaggeration to say the tax cuts “caused” the drop in stock prices. It would also be a big mistake as a matter of message and ideology.</p>
<p><span class="pullquote-right">The right criticism of Trump and the Republicans is not that they increased the deficit. The right criticism is that the Republicans needlessly gave a huge gift to billionaires.</span></p>
<p>Trump’s proposed $1.5 trillion infrastructure plan is a fake. It’s mainly privatization of public assets, with windfall profit opportunities for financiers paid for by consumers and local taxpayers. If you like privatized toll roads and more expensive water and sewer charges, you’ll love the Trump plan.</p>
<p>It would have been smart policy to increase the deficit by a trillion or more dollars, to finance true public investments in infrastructure and green transition. That would create jobs and increase productivity, in contrast to Trump’s phony plan.</p>
<p>Within broad limits, deficits can be accommodated, and Democrats have no business in the deficit-hawk camp. Even less should Democrats decry increases in workers’ wages. It’s no accident that the one senator who went nuts about the deficit was Rand Paul.</p>
<p>Indeed, if they do take back control of the Congress, the last thing Democrats should do is emulate the austerity policies of Clinton and Obama. Instead: cut back military spending and tax breaks for the rich, spend the money on public investments, and appoint a Fed chair in the spirit of Janet Yellen.</p>
<p>The stock market will take care of itself. Ditto the deficit.</p>
<p><em>An <a href="https://www.huffingtonpost.com/entry/opinion-kuttner-stock-market_us_5a811061e4b08dfc930574e2">earlier version</a> of this article appeared at</em> The Huffington Post<em>. <a href="http://www.prospect.org/subscribe">Subscribe here</a>.</em></p>
</div></div></div>Tue, 13 Feb 2018 10:00:00 +0000229533 at http://prospect.orgRobert KuttnerThe Democrats’ False Choicehttp://prospect.org/article/democrats%E2%80%99-false-choice
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<p>A supporter of Democratic candidate for U.S. Senate Doug Jones reacts during an election-night watch party in Birmingham</p>
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<p><em>This article <a href="https://www.huffingtonpost.com/entry/opinion-kuttner-democrats-choice_us_5a7870f4e4b0905433b6c40d">originally appeared</a> at</em> The Huffington Post. <em><a href="http://www.prospect.org/subscribe">Subscribe here</a>.</em></p>
<p><span class="dropcap">S</span>hould Democrats go all out to energize a “rising electorate” of women, blacks, Latinos, Asians, immigrants, LGBTQ people, and on-the-march young voters? Or should the Democrats go all out to rebuild their shattered reputation as the Party of Roosevelt that cares about the white working class?</p>
<p>A great deal has been written by advocates of both views, and many of these articles and speeches have talked right past each other.</p>
<p>For instance, advocates of the new rainbow, majority-minority coalition argue that white working-class voters are privileged relative to people of color, and that progressives can win without them, without compromising on race, gender, immigration, and inclusion to pander to a coddled white working class.</p>
<p>Conversely, champions of the white-working-class emphasis point out that the white working class may be a declining share of the electorate but that it is distributed geographically, alas, with great efficiency.</p>
<p>These voters, defined as those without a college degree, are down to 34 percent of the electorate nationally, but over 50 percent in every state of the Midwest, over 60 percent statewide in Indiana, Iowa, Ohio, Missouri and Wisconsin, and over 80 percent in key counties of western Pennsylvania, Michigan, Ohio, and Wisconsin.</p>
<p>Do those states ring a bell? They are, of course, where Democratic support has been collapsing, and where Hillary Clinton lost the election.</p>
<p>Partisans of the Don’t Forget the White Working Class View also observe that although the group has been “privileged” relative to minorities historically, for about two generations they also have been losing ground. The only truly privileged group today is the 1 percent—who just gained even more economic and political privilege via the tax bill.</p>
<p>“Rising electorate” advocates respond that if Democrats would only maximize the turnout of the new electorate, they could forget about those white working-class voters, many of whom are hopelessly racist, sexist, homophobic, anti-immigrant, violent, and worse—let Trump have them.</p>
<p>SPOILER ALERT: The punch line of this column, if you haven’t guessed it, is that this argument inside the family is our old nemesis, the False Dichotomy. <span class="pullquote-right">Democrats need to do more for downtrodden people of all races, including whites, and they need to be the party of justice for groups oppressed based on their race, gender, sexuality, national origin, or immigrant status.</span></p>
<p>If Democrats don’t pull this off—if they don’t stop fighting among themselves—the Republican corporate elite will keep laughing all the way to the bank and the polling place. But this truism turns out to be very challenging to execute in practice, and there is far too much self-righteousness on both sides of the argument.</p>
<p>I could quote any number of recent pieces, but here are some samples.</p>
<p>Steve Phillips, a respected African American strategist from Democracy of Color, writing in <em>The <a href="https://www.nytimes.com/2017/12/15/opinion/democrats-alabama-campaigns.html">New York Times</a></em>, observed that 56 percent of the Alabama voters who sent Doug Jones to the senate were black, a higher turnout than the black share of the Alabama electorate, and that: “If Democrats want to win, they will elevate and give broad budgetary authority to strategists and organizers with long histories and deep ties in the country’s communities of color.”</p>
<p>Ruy Teixeira, a pollster, social scientist, and strategist whom I much admire, counters persuasively in a piece for Vox titled “<a href="https://www.vox.com/the-big-idea/2018/1/29/16945106/democrats-white-working-class-demographics-alabama-clinton-obama-base">The Math is Clear: Democrats Need to Win More White Working Class Votes</a>”:</p>
<p style="margin-left:.5in;"><em>Jones’s triumph was not attributable to his strong showing among black voters alone, or even a combination of black voters and white college graduates. My analysis indicates that Jones benefited from a margin swing of more than 30 points among white non-college voters, relative to the 2016 presidential race in the state.</em></p>
<p>But Bill Spriggs, senior professor of economics at Howard University and chief economist of the AFL-CIO, points out what should be obvious. Writing in <em><a href="http://prospect.org/article/why-white-worker-theme-harmful">The American Prospect</a></em>, Spriggs observed that the challenge is both race and class:</p>
<p style="margin-left:.5in;"><em>Democrats need to spend more time developing a frame to combat inequality. They need to do a better job of explaining that income inequality is a threat to economic growth. They need to be spending time helping Americans take the blinders off and see that workers, of all races, are being given the shaft by a system where corporate greed has become an elite “entitlement.” They need to pull the Band-Aid off a false sense there is some white privilege that can spare some workers the wrath of America’s war on working people. They must fess up to their quiet, and sometimes vocal, support of an agenda that attacked America’s workers. They need to stop believing the problem confronting American workers is that they are uneducated or unskilled. They need to stop defining the white working class as the less educated. Those are the perennial excuses meted out to black workers. Young black workers reacted angrily in 2016 to a perception that their pain was being ignored. They didn’t vote for Trump, but Clinton lost as much because they didn’t vote for her either as Trump won because white voters voted for him.</em></p>
<p>Keep the emphasis on the economic screwing that the one percent and Republicans are giving to working people of all races and genders, and you stand a better chance of bridging these divides. This is all the more important as centrist Democrats close to Wall Street discover the magic of doubling down on identity politics to disguise their opposition to needed radical economic reforms.</p>
<p>This is tough stuff. It is even tougher in a presidential year, when aspiring Democratic candidates will be tempted to demonize their rivals as too inclined to sell the party’s soul to attract racist Trump voters, or too inclined to stress the group identities that divide rather than unite Democrats.</p>
<p>Given the immense stakes in 2020 and beyond, the last thing the Democrats need is another circular firing squad.</p>
</div></div></div>Tue, 06 Feb 2018 10:00:00 +0000229479 at http://prospect.orgRobert KuttnerTrump, the Globalist Plutocrathttp://prospect.org/article/trump-globalist-plutocrat
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<p>President Donald Trump about to speak at the World Economic Forum in Davos, Switzerland</p>
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<p><em>This article <a href="https://www.huffingtonpost.com/author/robert-kuttner">originally appeared</a> at </em>The Huffington Post. <em><a href="http://www.prospect.org/subscribe">Subscribe here</a>.</em></p>
<p><span class="dropcap">I</span>n case there was still any doubt, Davos showed us who <a href="https://www.huffingtonpost.com/topic/donald-trump">Donald Trump</a> really is: a member of the globalist plutocracy. Strip the racism from his nationalist appeal and there is nothing there. It’s camouflage for his service to the global billionaire class from which he comes.</p>
<p>The enthusiastic reception of Trump at the annual World Economic Forum in Switzerland also taught us something about the global capitalist elite. As long as Trump embraces their interests, doesn’t urinate on the podium, and reads a canned speech without rude ad-libs, they praise him as a born-again global statesman.</p>
<p>Globalist capital doesn’t care if you are a thug, a fraud, or an aspiring dictator, as long as you do their bidding. So much for the idea that the market system and liberal democracy are natural complements. They are not.</p>
<p>Democracy has expanded over the past century precisely by keeping private markets in their place, not by going all-in for markets. Trump’s gutting of public-interest regulation, his tax cutting for the 1 percent, and his effort to crush democracy go hand in hand.</p>
<p>The conservative journalist David Frum, a Trump detractor, puts it very well in his new book, <em>Trumpocracy</em>, when he describes the Republicans as “a coalition of the nation’s biggest winners from globalization and its biggest losers. The winners wrote the policy; the losers provided the votes.” You might say the losers, the downtrodden working-class and white nationalist voters who still rabidly support Trump, have been sucker-punched.</p>
<p>But what about Trump’s <a href="https://www.huffingtonpost.com/entry/trump-solar-tariff_us_5a66328de4b0022830057908">tariffs on solar panels</a>? Isn’t that a kind of pro-worker nationalism? His retaliation against Chinese panels, which are heavily subsidized in order to drive out U.S. production, have been roundly criticized left, right, and center. Doesn’t that make Trump’s trade policy insurgent and populist?</p>
<p>Not a chance. The orthodox view blasts Trump’s policy as “protectionist.” Maybe someone can explain why it’s protectionist to challenge another country’s protectionism.</p>
<p>Chinese trade in heavily subsidized and sheltered solar panels is not exactly free trade or free-market capitalism. Many conventional free traders and environmentalists alike have <a href="https://www.nytimes.com/2018/01/24/opinion/tariffs-us-solar-clean-energy.html">criticized the tariffs</a> because in the short run they will raise the cost of solar panels, slowing down the transition to a renewable economy and likely costing some installation jobs.</p>
<p>But without a serious industrial policy to bring back solar production to the U.S., these tariffs are just a symbolic potshot. Trump’s deeper failure, and what makes his economic nationalism phony, is his refusal to connect getting tough on China’s protectionism to a policy to bring back manufacturing to the United States. We can’t stay in the game of technological innovation if we lose the industry, and it’s innovation that keeps lowering costs over time.</p>
<p>Not surprisingly, the rest of <span class="pullquote-right">Trump’s speech was bland reassurance that he, too, believes in globalization—of the kind that has been leaving most workers behind.</span> The new tax law that he bragged so much about dramatically increases the incentives for moving U.S. jobs offshore. The corporate tax rate was cut to 21 percent. But if a U.S. corporation invests overseas instead, the rate in most cases is just half that—10.5 percent.</p>
<p>Finally, what about Trump’s boast that the economy is performing superbly on his watch—thanks to business confidence and investment, the supposed fruits of deregulation and tax cutting—as proven by the low rate of unemployment and the soaring stock market? This, too, is phony.</p>
<p>The recovery finally kicked in under Obama, driven mainly by very low interest rates. If you take a close look at the GDP growth rate in Trump’s first year, it is almost identical to the growth rate in Obama’s last three years.</p>
<p>The growth rate for 2017, 2.5 percent, was right around the trend line. Growth was 2.4 percent in 2014 and 2.6 percent in 2015, before dipping slightly in 2016. The stronger growth in the first two quarters of 2017, 3.1 and 3.2 percent respectively, could not have been the result of Trump’s policies, because none of them had kicked in yet.</p>
<p>As for the stock market, it too is the result of very low interest rates, further propped up by corporate stock buybacks. When corporations use their profit and tax breaks to buy back stock and pump up share values, it enriches executives (who are partly compensated with stock options) and investors, but does nothing for the real economy, which needs more investment. Nobel laureate <a href="https://www.project-syndicate.org/commentary/us-stock-volatility-bear-market-by-robert-j--shiller-2017-09?barrier=accessreg">Robert Shiller investigated why the U.S. stock market is outperforming others</a>, and attributes much of the difference to corporate stock buybacks.</p>
<p>According to press reports, small investors are now jumping into the stock market for fear of losing out, pumping it up further. They are always the last ones in and the first ones burned when the market turns. </p>
<p>But won’t the booming economy help the Republicans in the 2018 midterm elections? Not likely, either. The problem with trickle-down is that it doesn’t trickle down.</p>
<p>With unemployment down to 4.1 percent, workers are beginning to get (very modest) raises. But nothing has changed the bleak outlook for an entire generation, facing gig work rather than real jobs, lousy low-wage service work, the lowest rate of homeownership for young adults in half a century, and over $1.3 trillion in student debt. Those deep structural changes will not be fixed by low unemployment rates; thus these statistics will not be sufficient to salvage Trump’s presidency.</p>
<p>Over to you, Robert Mueller.</p>
</div></div></div>Tue, 30 Jan 2018 10:00:00 +0000229425 at http://prospect.orgRobert KuttnerDavos Manhttp://prospect.org/article/davos-man
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<p>President Donald Trump boards Air Force One at Andrews Air Force Base in Maryland</p>
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<p><span class="dropcap">T</span>he annual Davos event has become a gathering of the very people responsible for a perverse version of globalization—one that has undermined the livelihoods of ordinary people—and stimulated a mass nationalistic backlash that has brought to power people like Donald Trump.</p>
<p>Will Trump use his speech to bash the plutocrats? Or to make it clear that he is their friend? Will he try to pose as economic nationalist and lecture them on all the ways that bad other countries hurt America? </p>
<p>Rhetorically, Trump (“America First!”) is anti-globalization. He is for re-negotiating trade deals that outsource of America jobs, and bringing back American manufacturing. A few of his officials, notably the U.S. Trade Representative, Robert Lighthizer, are taking this vow seriously and trying to fashion policies to match.</p>
<p>There are, however, three problems. The first is that trade issues are blindingly complicated, and Trump has no patience for detail or nuance. Mainly, he is intuitively brilliant at channeling the discontent.</p>
<p>Second, Trump’s top economic officials (who outrank Lighthizer), namely Goldman Sachs veterans Gary Cohn, who heads the National Economic Council, and Treasury Secretary Steven Mnuchin, epitomize the Davos club and the goal of dismantling a nationally regulated form of capitalism.</p>
<p>Trade Representative Lighthizer may win a few skirmishes, but the Trump administration as a whole is as corporate and as globalist as they come. The recent tax bill, which gives giant corporations a huge tax break for bringing home profits stashed overseas, actually creates new incentives for moving jobs abroad. The Trump administration’s regulatory officials are systematically repealing the remaining rules that make it possible to regulate the abuses of finance when big banks hide their frauds offshore.</p>
<p>Third, while a very different set of global rules is possible, Trump is unlikely to advocate it. The very term, globalization, is widely misunderstood. The issue is often framed as “protectionism” versus “free trade” (and only an economic illiterate would be for protectionism).</p>
<p>But that’s not the real choice at all. Obviously, we are going to have a great deal of trade, technology exchange, and cross-border investment. The real question is: globalization on whose terms?</p>
<p>The Bretton Woods Agreement of 1944, brokered by the Roosevelt administration, created a global financial system that allowed individual countries to strictly regulate financial institutions, to run full-employment economies, and to have tough social protections that would not be defined as violations of somebody’s private property rights.</p>
<p>FDR understood that the global system needed to make room for domestic New Deals. But since the 1980s, as the Davos view has gained power, the Bretton Woods norms have been reversed. Managed capitalism, of the sort that once produced balanced prosperity, has been redefined as protectionist.</p>
<p>Reverting to raw capitalism was supposed to spur economic growth, to the benefit of all. But growth rates in the West are well below those of the postwar golden era. Meanwhile, the nations that have violated the principles of free markets, like China, South Korea, and Japan, have emerged as the world’s export powerhouses.</p>
<p>So what might Trump likely to say, and what should he say?</p>
<p>Trump could view Davos as yet another platform to tell the rest of the world to go to hell, knowing that such rhetoric plays well with his base. But with Trump, you never know whether you are going to get insult or flattery. Indeed, Trump himself probably doesn’t know until the words come out of his mouth.</p>
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<p>Davos in winter</p>
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<p>Actually, Davos is Trump’s sort of crowd, a kind of Mar-a-Lago in the Alps. He may well opt for a mix of bluster and reassurance, telling the assembled notables that they have nothing to fear from the U.S. as long as they play by balanced rules—and if they don’t, he has the biggest button.</p>
<p>But even if Trump is in a rare, well-modulated mood, this is likely to be a missed opportunity. Some future American president could demand changes to the world trading system more in the spirit of Bretton Woods. That would mean plenty of room for nations to have labor and social protections, as well as industrial policies, without violating the WTO. It could mean insisting that nations like China, which really is protectionist, play by roughly the same rules as the rest of the system, or face high tariffs.</p>
<p>This shift would require clear thinking, deft diplomacy, and a break with global financial elites. None of which describes Donald Trump.</p>
<p><em>An <a href="https://www.huffingtonpost.com/entry/opinion-kuttner-trump-davos_us_5a63b1c8e4b002283003558b">earlier version</a> of this article appeared at</em> The Huffington Post. <em><a href="http://www.prospect.org/subscribe">Subscribe here</a>.</em></p>
</div></div></div>Tue, 23 Jan 2018 10:00:00 +0000229367 at http://prospect.orgRobert Kuttner